Some of the extra money is to go towards soldiers' pay, officials say
China says it will increase military spending by a "modest" 14.9% this year to 480.6bn yuan ($70.2bn; £50bn).
The money will pay for better salaries, modernisation, and "capacity building programmes" including counter-terrorism and disaster relief, a spokesman said.
China's military is for self-protection and does not pose a threat to any country, said official Li Zhaoxing.
Analysts say defence spending is higher than the official figure, but Beijing says there are no hidden outlays.
"There is no such thing as so-called hidden military expenditure in China," said Mr Li at a news conference in Beijing.
The new military budget was released on the eve of the annual session of the National People's Congress, China's parliament.
Mr Li described the increase as modest, saying that China wanted to protect its sovereignty and territorial integrity "and would not threaten any country".
Analysts say the increase marks the 19th double-digit boost in defence spending by China in the last 20 years.
Previous increases in defence spending have been greeted by alarm from China's neighbours and the US, who have voiced concerns over Beijing's modernisation of its military.
The BBC's James Reynolds in Beijing says that many people in China point out that - per capita - China's spending is still relatively modest.
They also say that China's military budget is still about eight times smaller than the military budget of the US, our correspondent adds.
The US military budget for 2009 has been pegged at $515bn, a 7.5% increase from 2008. That figure does not include billions of dollars for the wars in Iraq and Afghanistan.