China will spend $91.5 billion on the People's Liberation Army, navy and air forces next year, marking a return to double-digit spending. Last year the defense budget rose 7.5 percent.
The increase is likely to increase alarm in Taiwan, Japan, India and other parts of Asia.
Announcing the military budget ahead of the annual National People's Congress, parliamentary spokesman Li Zhaoxing sought to such allay fears.
Li said China is devoted to peaceful development and that Beijing's military policy is defensive by nature.
He said China has a long coastline and various borders to secure - but given its geographical size and vast population of 1.34 billion, the military spending is low compared with other modern nations.
Li added that the increase will not pose a threat to any other country.
The budget was presented one day before the National People's Congress opens in Beijing.
The rise accounts for just 6 percent of China's national budget. The military budget is one-fifth of the United States’, which last month requested $553 billion for 2012 - up 4.2 percent from 2011.
But China's military build-up has many governments rattled, including the U.S.
The PLA recently revealed its first stealth jet fighter.
The navy is fast expanding into distant waters and work on aircraft carriers and sophisticated weaponry have caused many defense analysts to say the balance of power in the Pacific is leaning China's way.
This week, the Japanese, Philippine and Vietnamese governments complained that Chinese military planes and naval vessels came close to violating their sovereign airspace and territorial waters.
Professor James Nolt is the campus dean of the New York Institute of Technology at Nanjing University, and an expert on security issues.
He says much of the budget increase will go toward rising costs as China updates its military equipment to international standards.
He also says some of the money will be spent on higher wages for personnel with higher skills.
"These two things are not often taken into account when people look at the Chinese military budget, and the raise in personal costs, and the great expense of replacing over-aged and worn out weapons and equipment," Nolt said. "In my view it does not represent a significant change in capability. It represents an increase in costs in order to maintain existing capabilities, relative to other countries."
Many regional security experts think China's real military budget is far higher, with extra spending buried in other departments or hidden from public gaze.
China's neighbors are upgrading their forces in response to its buildup.
India increased annual defense spending by about 12 percent this week and is shopping for advanced aircraft and submarines.