Japan says China should publish more accurate information about its defence spending and military capabilities.
The Japanese public is concerned at China's military build-up
In its annual report, the Japanese defence ministry reiterated its concern about China's modernisation and expansion of its armed forces.
It said the Japanese public had become very concerned, adding that China's military should be monitored closely.
The report also said North Korea needed monitoring, because of its development of both nuclear and ballistic missiles.
China's military expansion was at the core of the annual Defence Agency report, which noted that Beijing planned to increase its defence budget by 12.6% this year.
The report - which comes just weeks after the US published a document stating that Chinese military power could pose a threat to the region - called for close monitoring of China's modernisation plans.
The agency noted what it called the intrusion of a Chinese nuclear-powered submarine into Japanese waters in November as an example of increasing Chinese naval activity close to Japan.
"It is necessary to keep paying attention to these modernisation trends and to carefully evaluate whether the modernisation of China's military forces exceeds the level necessary for its national defence," the report said.
"We would like to ask China to be a little more transparent," the director-general of the Defence Agency, Yoshinori Ono, told reporters on Tuesday.
But Mr Ono stressed he was not accusing China of threatening Japan in any way.
"Japan has to keep a good relationship with China as we are neighbours," he said.
The two nations have seen their bilateral relations deteriorate in recent months, with disagreements over their wartime past and access to drilling rights in the East China Sea.
The Defence Agency also mentioned North Korea in its report, saying it was not clear whether the communist nation was telling the truth about its nuclear capabilities.
But it said "the possibility of North Korea having considerably advanced its nuclear weapons programme cannot be excluded."
"North Korea needs to be watched carefully because of the problems it poses with its development, deployment and proliferation of ballistic missiles as well as the nuclear problems in general," the report said.