Chinese and US ships have confronted each other in the South China Sea
China has described criticism of its military growth strategy by the United States as groundless and irresponsible.
A defence ministry spokesman in Beijing said that China's military development is defensive, and a force for peace.
He rejected US Defence Secretary Robert Gates' comments that US naval carriers and air bases in the Pacific faced new threats from China's modernisation.
The war of words follows a resurgence of trade disputes between the two powers.
China said Washington should respect China's defence policy and correct its comments.
It also criticised an intelligence report that listed China as one of the main challengers to the US.
A spokesman for China's defence ministry said there was "not a scrap of truth" to the US view, and it was "extremely irresponsible".
China's military development is a "positive factor for regional peace and stability" and "defensive in nature," said spokesman Hu Changming in a press release.
Earlier this week, US National Intelligence Director Dennis Blair said that China's military modernisation programme posed a threat and that China's involvement in cyber technology had become aggressive.
The US has also expressed concern about China's increasing consumption of global natural resources.
A US National Intelligence Strategy said in its new intelligence guidelines that Beijing is a major challenger along with Russia, Iran and North Korea.
Submarines on display in the Chinese port of Qingdao
China's "increasing natural resource-focused diplomacy and military modernisation are among the factors making it a complex global challenge," said the NIS document, which guides the US strategic analysis for the next four years.
US Defence Secretary Mr Gates said China's "investments in cyber and anti-satellite warfare, anti-air and anti-ship weaponry, and ballistic missiles could threaten America's primary way to project power and help allies in the Pacific".
Already this year, there have been a handful of incidents off China's southern coast.
China says the South China Sea, and its island chains, are part of its sovereign territory and it has previously complained about US naval activity in the region.
Beijing suspended military ties between the two nations last October in protest at the US decision to sell $6.5bn-worth of arms to Taiwan, an island China considers its own.
Separately, trade disputes have resurged in recent weeks following the US imposition of tariffs on Chinese-made tyres, and China's launch of an "anti-dumping and anti-subsidy" probe into imports of some US car products and chicken meat.