"The Taiwan issue is entirely China's internal affair and external forces cannot interfere. The Chinese military will take all necessary measures to resolutely defend national sovereignty and territorial integrity," China's defence ministry said on Tuesday.
The ministry said the report "exaggerated the so-called Chinese threat" and damaged the political foundation of China-Japan relations.
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The Japanese defence paper said Beijing had intensified military activities around Taiwan, including sending more aircraft through the island's southwestern airspace.
"Stabilising the situation surrounding Taiwan is important for Japan's security and the stability of the international community," it said.
"Therefore, it is necessary that we pay close attention to the situation with a sense of crisis more than ever before."
It also accused China of lacking transparency in its national defence policy and military affairs, saying that the raising of tensions in the East China Sea and other maritime areas as a result of China's coastguard law was "completely unacceptable" to the country.
In the paper's preface, Japanese Defence Minister Nobuo Kishi said Japan would work with countries that shared the same values, such as the United States, Australia and Britain to promote a free and open Indo-Pacific.
Japan has become increasingly outspoken on regional security, including on Taiwan.
On Tuesday, deputy foreign minister Takeo Mori and US deputy secretary of state Wendy Sherman affirmed the importance of the peace and stability of the Taiwan Strait.
Along with their South Korean counterpart Choi Jong-kun, Mori and Sherman agreed to oppose "activities that undermine the rules-based international order and affirmed the need to maintain an inclusive, free, and open Indo-Pacific region", according to a US State Department statement.
Deputy prime minister Taro Aso also spoke out earlier this month on the need for Japan and the US to defend Taiwan from invasion.
And after a meeting in Washington in April, Japanese Prime Minister Yoshihide Suga and US President Joe Biden released a joint statement calling for "peace and stability across the Taiwan Strait" , the first reference to this issue in such a document in over half a century.
Beijing, which regards Taiwan as a renegade province, has also been focusing attention on the island.
In a speech to mark the Communist Party's centenary on July 1, Chinese President Xi Jinping said completing the "reunification" with Taiwan was an "unshakeable commitment" of the party , and China would utterly defeat any attempt towards "Taiwan independence".
Though Beijing has never ruled out the possibility of using force to retake Taiwan, Xi called for a "peaceful national reunification".
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