A lack of transparency in official statistics makes it unclear when China last announced such a low rate of increase in its defence spending.

However, Thursday's rise is the slowest in at least a decade, and less than half of the 15.9 per cent average rate of increase from 1999 to 2008, according to figures reported last year by state-run media.

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Al Jazeera's Melissa Chan reports on China's defence spending

Last year's increase was announced at 14.9 per cent.

China's People's Liberation Army (PLA) is the world's largest standing military with more than 2.3 million members.

But the government's publically stated figures on military expenditure are widely viewed as under-representing actual spending, with some key military programmes kept off the official books.

Announcing the new budget Li told reporters that the increase will be used to enhance China's ability "to meet various threats".

"China is committed to peaceful development and a military posture that is defensive in nature," he said.

Army development

Li added that this year's defence budget remained low in relation to the country's vast territory and population.

China has the largest standing army with more than two million members [EPA]

He said that the spending accounted for about 1.4 percent of gross domestic product in recent years, as opposed to more than four per cent in the United States and more than two per cent in Britain, France and Russia.

Rapid military modernisation and the acquisition of jet fighters, advanced warships and submarines have aroused suspicions by some international powers over China's intentions.

Beijing's growing diplomatic assertiveness and the country's booming economic might have also raised concerns.

Officials have said that about one-third of China's spending goes to salaries and improving living conditions for soldiers, with the rest split between replacing equipment and military research and development.

Li said the new budget would help China "face multi-faceted military threats (and) improve capabilities for diverse military tasks".