China has deployed some of its most sophisticated Navy vessels to the eastern coast of Malaysia.
Wednesday's report from the Xinhua news agency is thought to be a play by Beijing to reinforce territorial claims to part of the South China Sea.
Al Jazeera's Rob McBride, reporting from Hong Kong, said military exercises, beginning on Saturday, have "taken many Asian neighbours and military analysts by surprise".
The exercises included the landing of amphibious craft just off the James Shoal, 80 kilometres off the Malaysian coast.
The James Shoal is China's most southerly territorial claim.
It is among several disputed parts of the South China Sea, including the Spratly Islands, that the People's Republic says belong to Beijing.
Our correspondent said the exercise culminated in a ceremony on James Shoal where soldiers and marines promised "to defend Chinese sovereignty".
The move, said Al Jazeera's McBride, could also be Beijing's answer to Washington's so-called "pivot strategy", which would see the US move more resources to East Asia.
Vietnamese boat 'attack'
Vietnam had accused China of opening fire on a fishing boat in the disputed South China Sea on Monday, but Beijing has denied the charges.
The Chinese navy stated that the claim was a "sheer fabrication".
"There is no such things that Chinese vessel fired with weapons or the Vietnames boats caught fire," a Chinese naval official told the state-owned Xinhua news agency.
Vietnam's foreign ministry had said on Monday that a fishing boat was "chased and shot at by a Chinese vessel" and called the incident a "serious violation of its sovereignty".