China’s reported launch of a hypersonic missile into orbit has raised concerns that U.S. rivals are quickly neutralizing the Pentagon’s missile defenses even as it invests tens of billions of dollars in upgrades.

In a test two months ago, the Chinese military sent a nuclear-capable missile into low-orbit space and around the globe before cruising down to its target, the Financial Times reported Saturday, citing people familiar with the matter. Although the weapon missed its mark by about two dozen miles, the paper said, the technology, once perfected, could be used to send nuclear warheads over the South Pole and around American antimissile systems in the northern hemisphere.

China disputed the paper’s account, with Foreign Ministry spokesman Zhao Lijian describing it as a “routine test of a space vehicle to verify technology for spacecraft reusability” and comparing it with systems being developed by private companies. “China will work with other countries in the world for the peaceful use of space for the benefit of mankind,” Zhao told a regular news briefing Monday.

If the missile test is confirmed, it would suggest that Chinese President Xi Jinping may be exploring orbital strikes as a way to counter American advancements in shooting down ballistic missiles before they can threaten the U.S. homeland. The Russians considered such “fractional orbital bombardment systems” during the Soviet era before abandoning them. But in 2018, Russia rolled out a series of new weapons that President Vladimir Putin said would render U.S. missile defenses “ineffective.”

The moves illustrate how the Pentagon’s push to develop and deploy more advanced antimissile systems, ostensibly to protect against weapons from North Korea and Iran, may be accelerating a new nuclear arms race. Kim Jong Un over the past few years has unveiled a wide range of missiles — testing what his regime described as a hypersonic glide vehicle last month — designed to thwart American and allied defenses.

Under Kim, North Korea has developed a series of solid-fuel ballistic missiles designed to fly too low to be intercepted by a U.S.-operated antimissile system known as the Terminal High Altitude Area Defense, or THAAD. The missiles may also be too fast to be stopped by Patriot surface-to-air missiles that defend against low-altitude rockets, weapons experts said.

Li Nan, a visiting senior research fellow at the East Asian Institute specializing in Chinese security and military policies at the National University of Singapore, described China sending a missile into orbit as “a game-changer.”

“If China was able to deploy one, that would basically neutralize U.S. missile defense,” Li said. “It makes it very hard for the U.S. to deal with this new type of missile and will make it very costly to combat and build up new capabilities to counteract this technology.”

After years of development, a U.S. Navy destroyer last year successfully intercepted a mock intercontinental ballistic missile designed to simulate one developed by North Korea. The test, which the head of the U.S. Missile Defense Agency described as an “incredible accomplishment and critical milestone,” would potentially allow ships in the U.S.’s Seventh Fleet to shoot down missiles in addition to 44 interceptors based in silos in California and Alaska.

The MDA plans to spend $45 billion between fiscal year 2020 and FY24, the Government Accountability Office said in April, after spending about $163 billion over the previous two decades. The Biden administration has pressed ahead with plans to develop a new antimissile warhead and expand defense systems in Alaska and Europe, despite cost overruns and delays.

The U.S. and China have increasingly squared off in places like the South China Sea and Taiwan Strait as part of what the Biden administration has characterized as “strategic competition” between the world’s two largest economies. The threat of a U.S. strike that wipes out Chinese missiles before they can hit an American target, has long been seen as a deterrent against more assertive military action by Beijing.

The U.S., like Russia, holds more than 4,000 warheads, according to a June report by the Stockholm International Peace Research Institute. The PLA Rocket Force, by comparison, added about 30 warheads to its stockpile of about 320 bombs over the past year.

Developing hypersonic glide vehicles are one way for countries such as China and North Korea to make the most of their smaller number of warheads, said Melissa Hanham, a nonproliferation expert and an affiliate with the Stanford Center for International Security and Cooperation. She said there wasn’t yet any public evidence that either country was considering an orbital bombardment strategy.

“However, weaponizing space in this way is extremely risky and destabilizing should any country pursue it,” Hanham said. “It raises that stakes of an unintended escalation which could lead to nuclear war.”

Pentagon Press Secretary John Kirby declined to comment on the Financial Times report Monday, saying only that Beijing’s efforts to advance its military showed why the U.S. regarded China as its “No. 1 pacing challenge.” “We have made clear our concerns about the military capabilities China continues to pursue, capabilities that only increase tensions in the region and beyond,” Kirby said.

The August test was one of several recent moves by Beijing that appeared intended to overcome U.S. advantages in both warhead stockpiles and missile shields and establish a more favorable balance of power. China is building at least 250 missile silos in at least three sites, according to independent analysis of satellite imagery, causing nonproliferation experts to speculate that the People’s Liberation Army might leave many empty to confuse and distract U.S. military planners.

Hu Xijin, editor in chief of the Communist Party’s Global Times newspaper, tweeted the Financial Times story Sunday, saying that Beijing would improve its nuclear deterrence to “ensure that the U.S. abandons the idea of nuclear blackmail against China.”

Ankit Panda, the Stanton senior fellow in the nuclear policy program at the Carnegie Endowment for International Peace, said China’s description of the test as a “space vehicle” likely can’t be taken at face value, since putting a hypersonic glide vehicle into orbit wouldn’t be routine. Although U.S. ship-based systems might be able to intercept such an attack by an intercontinental ballistic missile, Panda said, ground-based systems in the north wouldn’t.

“Existing U.S. counter-ICBM defenses all rely on intercepting the incoming warhead outside the atmosphere, which is partly why China has looked to gliders in the first place,” Panda said.

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