The defence budget will rise 12.7 per cent in 2011 to 601.1 billion yuan (65.4 billions euros), according to Li Zhaoxing, spokesperson of the national parliament.
The budgetary report must now be approved by the Communist Party-controlled National People's Congress, which meets Saturday.
Li described military spending as "relatively low" as a percentage of gross domestic product compared with the rest of the world.
The figure represents six per cent of the total national budget in the world's second-largest economy.
But the increase has alarmed the United States, Australia and several of China’s Asian neighbours because it represents a return to double-digit increases after a lower 7.5 per cent raise in 2010.
China’s People's Liberation Army insists that the increased spending poses no external threat and is purely defensive in nature to protect China's land and sea borders.