The paper, approved by the Japanese Cabinet on Tuesday, describes Japan's security environment as "increasingly difficult". Because of this, Tokyo said it is vital to bolster military capabilities on the ground, at sea and in the air.
Tensions with China and the Democratic People's Republic of Korea are cited as the reason to increase defense spending, with Tokyo accusing Beijing of flexing its muscles against Japan.
China's Ministry of National Defense took a firm position on Tuesday against Tokyo's "groundless accusations".
It said Japan is "deliberately hyping the threat from China, seeking excuses for its military and security policy maneuvers as well as its armaments expansion".
Japan's Kyodo News Agency warned in a commentary that Tokyo has resorted to a military buildup and "it may be a source of instability in Asia".
Zhang Junshe, deputy director of China's Naval Military Studies Research Institute, said Japan and some of its leading media have a history of making malicious assessments of regular training and observations made by the People's Liberation Army.
Japan's defense budget has risen for the second year, to 4.78 trillion yen ($46.6 billion), up by 103.2 billion yen or 2.8 percent.
This year also heralds the start of Japan's five-year defense buildup plan, under which it will buy unmanned surveillance drones and set up an amphibious unit trained specifically to take remote islands.
It is also planning to buy military hardware such as amphibious vehicles and F-35 stealth fighter jets.
Zhou Yongsheng, a professor of Japanese studies at China Foreign Affairs University, said huge ambitions for military expansion - and even preparations for wartime operations - have been placed on Japanese Prime Minister Shinzo Abe's agenda, and the radical policy campaign will continue.
Tokyo eased arms export rules in April, approving its first weapons exports in July.
The Mainichi Shimbun newspaper said the Defense Ministry is also looking at new ways to incorporate civilians into the military in special circumstances.
But Abe's attempts to boost the Japanese military have ruffled feathers in Japan and overseas.
Contact the writers at caihong@chinadaily.com.cn and zhangyunbi@chinadaily.com.cn