Secretary General Jens Stoltenberg said China's growing military capabilities -- including missiles that could hit Europe and the United States -- meant the alliance had to tackle the issue together.

The leaders of NATO's 29 member states will sign off a joint summit statement on Wednesday acknowledging the "opportunities and challenges" posed by China's rise.

The meeting outside London to mark the alliance's 70th birthday, will also approve an internal report drawing up an action plan for how NATO should approach China.

"We have now recognised that the rise of China has security implications for all allies," the NATO secretary general said at an event in London.

"China has the second largest defence budget in the world and has recently displayed a lot of new, modern capabilities including long-range missiles able to reach the whole of Europe and the United States."

Under President Xi Jinping, China has adopted a more bullish attitude to foreign relations and has been accused of mounting cyber attacks against Europe and spying to steal intellectual property.

The fiercely contested South China Sea has become a flashpoint for Beijing and the US, with Washington accusing China of "intimidation".

Beijing has built military installations, rammed vessels and sent survey ships into disputed territory in the sea, where several countries have competing claims.

- No 'new adversary' -

NATO's defence remit is limited to Europe and North America, but Stoltenberg said China's influence was beginning to reach its shores.

"It's not about moving NATO into the South China Sea but about taking into account that China is coming closer to us in the Arctic, in Africa, investing heavily in our infrastructure in Europe, in cyberspace," he said.

But he insisted the new NATO approach was "not to create a new adversary but to analyse and understand and respond in a balanced way to the challenges China poses".

Europe has struggled to find a common position on China, with some states stressing the risk it poses while others -- notably poorer countries in the south and east -- welcoming Beijing's willingness to invest in infrastructure projects.

The draft summit declaration -- agreed by ambassadors but yet to be approved by leaders -- also stresses the need for "secure and resilient" communications systems, particularly 5G infrastructure.

This points to growing anxiety in NATO and the West at large about the role of Chinese companies, particularly Huawei, in building the networks needed for the next generation of mobile communications.

Washington has pressured Europe to exclude Huawei from developing 5G networks, saying it has close ties to the Chinese government and its equipment could be used to spy for Beijing.

Last week Germany said it planned to tighten rules on non-EU takeovers of its high-tech firms, following concern about acquisitions by Chinese companies.

The move affects firms working in the areas of robotics, artificial intelligence, semi-conductors, biotechnology and quantum technology.

Tomas Valasek, a senior fellow with the Carnegie Europe think tank, said NATO would likely take time to build a policy on China.

He said that long-term it could represent "a bigger problem but a slower burning one" than NATO's traditional adversary Russia.