The show comes weeks after tensions flared up following a stand-off with the United States in the South China Sea.
China said the joint naval parade was an attempt to promote understanding about its military development.
"Suspicions about China being a 'threat' to world security is mostly because of ... a lack of understanding about China," Ding Yiping, the deputy commander of the navy, told the official Xinhua news agency this week.
Despite assertions that its military build-up does not pose a threat to other countries, some experts believe that China is starting to project its new-found confidence and power.
"Showing the country's military strength is also popular with the public," Shi Yinhong, a professor of international relations at Renmin University in Beijing, said.
"This parade is also meant to consolidate domestic support for greater spending on the navy."
China recently sent naval ships to the Gulf of Aden, off the coast of Somalia, for an anti-piracy mission, marking the navy's first potential combat mission beyond its territorial waters.
'Show of force'
|The parade is only the fourth since 1949 and the first on an international scale [EPA]
Admiral Wu Shengli, the navy's commander-in-chief, said earlier this month that China would develop a new generation of warships and aircraft to boost the military's capabilities over a wider geographical range.
The Chinese navy is still lagging behind the Americans, the Japanese and the Russians in terms of technology, some analysts say.
But they are now "the first navy in Asia" in terms of tonnage, Jean-Pierre Cabestan, professor of political science at Hong Kong Baptist University, said.
"It's a show of force, of power," Cabestan said of Thursday's parade.
"It's a public relations display with a double message – China as an integrator, showing it is keeping with the rules of the international game, but also showing it is now in the big power arena."