Both the Foreign Ministry and Ministry of National Defense voiced "serious concerns" toward negative comments from "The 2016 Defense White Paper" released by the Australian Department of Defense on Thursday.
The document also noted future plans of Australia to boost defense expenditure.
Foreign Ministry spokeswoman Hua Chunying said "China, of course, does not expect to see regional tension or an arms race" when asked about Australia's increasing budget on building new types of submarines and whether China is concerned by such an arms race in the Asia-Pacific.
"The relevant parties are hoped to stop so-called joint military drills and joint patrols, and stop consistently increasing military deployment in the Asia-Pacific," Hua said.
Also on Thursday, the Ministry of National Defense criticized US Admiral Harry Harris' attempt to lobby for a greater defense budget by accusing China of "seeking hegemony" in the neighborhood.
Harris, commander of US forces in the Pacific, said at a congressional hearing earlier this week that "China seeks hegemony in East Asia" and a change of "the operational landscape".
"I've noticed that Admiral Harris has made the remarks to get more military budget from the Congress," ministry spokesman Wu Qian said.
"You have your right to strive for more military budget, which we do not intervene, but it is in appropriate to ask for more money by carelessly smearing China," Wu added.
Harris has been known for his high-profile and outspoken approach as he recently has stood at the forefront of challenging China's sovereignty in the South China Sea.
"How could such a country be called a 'hegemon' when its islands and reefs have been occupied by other countries for decades, its coastal waters have faced close-in reconnaissance by warships and airplanes of other countries and its military has never waged a war?" Wu said.
Wu added that: "In China, hegemony is a word reserved for a certain country, and that country is supposed to know well about that."
Greg Austin, a Professorial Fellow with the EastWest Institute in New York, said in an online article that there is "a big lie" perpetrated by the Pentagon, a lie claiming that China's actions in the South China Sea "threaten commercial shipping".
"There is an obsession with minute adjustment in military deployment by China, and not others," Austin wrote in a column on The Diplomat magazine website.