UPDATE 7-China flexes military muscle to mark 70 years of Communist rule

* President Xi Jinping oversees celebrations, military parade

* Xi pledges China to remain on path of peaceful development

* China highlights military and technological prowess

* Celebrations come amid challenges of trade war, Hong Kong unrest (Adds Pentagon official comment)

By Ben Blanchard

BEIJING, Oct 1 (Reuters) - China celebrated its growing power and confidence with a big display of military hardware and goose-stepping troops in Beijing on Tuesday, overseen by President Xi Jinping, who pledged peaceful development on Communist China's 70th birthday.

The event is the country's most important of the year as it looks to project its assurance in the face of mounting challenges, including nearly four months of anti-government protests in Hong Kong and an economy-sapping trade war with the United States.

Xi, dressed in a slate grey "Mao" suit and accompanied by his predecessors Hu Jintao and Jiang Zemin, said China would pursue a mutually beneficial strategy of opening up.

The military should resolutely safeguard China's sovereignty, security and development interests, and firmly uphold world peace, Xi told a handpicked crowd at Tiananmen Square, in comments carried live on state television.

"No force can ever shake the status of China, or stop the Chinese people and nation from marching forward," Xi said from the Gate of Heavenly Peace, where Mao Zedong proclaimed the founding of the People's Republic of China on this day in 1949.

China must maintain lasting prosperity and stability in Hong Kong and Macao, promote the peaceful development of relations with self-ruled Taiwan and "continue to strive for the motherland's complete reunification", he added.

Xi, whose military modernisation programme has rattled nerves around the region, then inspected row upon row of military hardware and immaculately presented troops.

At one stage, Xi, riding past troops in a black, open-roofed limousine, shouted: "Hello comrades, hard-working comrades!"

The massed ranks bellowed back: "Follow the Party! Fight to win! Forge exemplary conduct!"

Returning to the stage, Xi watched as lines of tanks, drones and missiles filed past.

Among the weapons on display were DF-41 intercontinental ballistic missiles, the backbone of China's nuclear deterrence, which can carry several nuclear warheads and reach as far as the United States.

"They have highly advanced capabilities and the range to reach the United States from mainland China," said Nozomu Yoshitomi, professor at Japan's Nihon University and a retired major general of Japan's Ground Self-Defence Force.