China has tested a nuclear-capable hypersonic missile, showing a capability that reportedly caught US intelligence by surprise.

A report in the Financial Times yesterday said the military in August launched a rocket with a hypersonic glide vehicle that flew through low-orbit space, circling Earth before cruising toward its target, which it missed by about 38 kilometers.

"The test showed China had made astounding progress on hypersonic weapons and was far more advanced than US officials realized," the report said.

Beijing did not respond to a request for comment on the claim, but there was a reaction from Washington. Pentagon spokesman John Kirby said: "We have made clear our concerns about the military capabilities China continues to pursue - capabilities that only increase tensions in the region and beyond. That is one reason why we hold China as our No 1 pacing challenge."

Along with China, the United States, Russia and at least five other countries are working on hypersonic technology.

At a parade in 2019, China showcased weaponry including a hypersonic missile, known as the DF-17.

Hypersonic missiles, like traditional ballistic missiles that can deliver nuclear weapons, can fly at more than five times the speed of sound.

But ballistic missiles fly high into space in an arc to reach a target while a hypersonic flies on a trajectory low in the atmosphere, potentially reaching a target more quickly.

Crucially, a hypersonic missile is maneuverable - like the slower, often subsonic cruise missile - making it harder to track and defend against.

The reported test comes as US-China tensions have mounted and Beijing has stepped up military activity near Taiwan.

DF-17 missiles are paraded on military vehicles in Beijing on National Day in 2019. AP

China hypersonic missile test a 'surprise'