China is to focus on projecting its military presence beyond its borders at sea, according to a strategy document.
The navy will shift its focus to "open seas protection", rather than "offshore waters defence" alone.
It will also speed up developing its cyber force to tackle "grave security threats", the State Council said.
China has been accused of aggressively pursuing territorial claims in the South China Sea which has sparked concern in Washington.
The strategy document highlighted four areas of critical importance - the ocean, outer space, nuclear force and cyber space. Its recent naval policy has prompted the most controversy.
In recent years, China has focused on building up its navy. It has launched an aircraft carrier and invested heavily in submarines and other warships.
It has also exercised its claims over islands in the South China Sea which the Philippines, Vietnam, Malaysia and Brunei variously dispute.
In one disputed area, the Spratly Islands, US officials say China has created about 800 hectares (2,000 acres) of dry land since 2014 that could be used as airstrips.
The strategy document warns of threats to China's maritime rights and interests.
It says China "will not attack unless [it is] attacked, but will counterattack" and mentions the "provocative actions of certain offshore neighbours" and "outside parties involving themselves in South China Sea affairs".
On the same day that the strategy document was released, state news agency Xinhua reported two 50-metre high lighthouses were to be built on a reefs in the Spratly Islands, which are claimed by Vietnam and the Philippines.
At a news conference to release the document, defence ministry spokesman Yang Yujun said: "Looking from the angle of sovereignty, China's development of construction on its islands is no different at all from all the other types of construction going on around the country."
He said island building was "beneficial to the whole of international society" because it aided China's search and rescue, and environmental protection work.
China criticised Washington after a US spy plane flew over areas near the Spratly Islands last week, with both sides accusing each other of stoking instability.
The strategy document also says China's air force will shift its focus from territorial air defence to both offence and defence, and building airspace defences with stronger military capabilities.