For the first time, a senior military official has said this was what happened in 1996, when tensions were high between Beijing and Taipei over former Taiwanese president Lee Teng-hui's proposal that relations be conducted on a 'state-to-state' basis, which Beijing took as a move towards full independence.

The PLA subsequently carried out a large military exercise and fired three missiles into the East China Sea only 18.5 kilometres from Taiwan's Keelung military base as a warning.

'The first shot hit the target accurately. But just as everyone was applauding the success, we lost track of the second and the third,' the senior military official said.

The colonel said the military's analysis afterwards suggested the two failures could have been caused by sudden disruption of GPS.

Most modern missiles rely on a combination of a built-in computer system and satellite positioning for guidance. Losing the satellite signal would severely reduce accuracy.

'It was a great shame for the PLA ... an unforgettable humiliation. That's how we made up our mind to develop our own global [satellite] navigation and positioning system, no matter how huge the cost,' the colonel said. 'Beidou is a must for us. We learned it the hard way.'

GPS is solely controlled and operated by the US government, which could shut it down in the event of a national emergency, reserving it for US military use only. The Pentagon has also downgraded the resolution of GPS for civilian use.

Dr Arthur Ding, a PLA expert at National Chengchi University in Taiwan, said it was possible for the US to interfere and deny GPS to the Chinese military. Washington at the time was concerned about the PLA's missile launch and sent Aegis-class warships to monitor the development.

'The PLA at the time had to rely on the commercial GPS service for guidance, as they had not yet developed their own positioning system. This gave the US an easy way to interfere,' he said, though knowing whether or not the US had shut down GPS was difficult.

China launched its first Beidou positioning satellite on October 20, 2000. A second was launched two months later, a third in May 2003 and a fourth in February 2007.

Initially, China intended to join the Galileo positioning system developed by Europe because of technology and cost concerns. Beijing was ready to commit Euro230 million (HK$2.67 billion) to the Galileo system, but soon lost patience over its progress. Instead, it decided to focus on its own system.

Galileo is not yet operational, while Beidou began to offer an open service last year with an accuracy within 10 metres. Xinhua has said that its licensed service - used by authorised or military users - could have a much greater accuracy.

Andrei Chang, editor-in-chief of the Canadian-based Kanwa Defence Review, said the PLA Air Force and Navy would be two key beneficiaries of the new global navigation and positioning services.

'While the US-owned GPS provides only approximate locations to its overseas clients, China's own version ... will provide the PLA with more reliable and effective navigation and positioning of force deployment,' he said.

'All precision-guided weapons, including long-range and cruise missiles and other sophisticated equipment that need precise data, would benefit the most.'

Xu Guangyu, a retired PLA general, said the military now had a full range of independent and sophisticated positioning and guidance tools to help its missiles, such as the Beidou navigation system and the Yuanwang missile and satellite tracking ship.

'There is no chance now for the US to use its GPS to interfere in our operations at all,' he said.