The security environment around Japan has become "increasingly severe" amid tensions with China and concern over North Korea, the Japanese defence ministry's annual white paper says.
The paper was adopted by PM Shinzo Abe at a cabinet meeting on Tuesday.
It described China's declaration of an air defence identification zone over disputed East China Sea islands as a "profoundly dangerous act".
China's actions, it warned, could result in "unintended consequences".
China and Japan are locked in a bitter dispute over an island chain called Senkaku in Japan and Diaoyu in China. Japan controls the islands.
Since the row escalated, Chinese ships and planes have been moving in and out of what Japan says is its territory, leading to fears of a clash.
'Dangerous activities'
The white paper said Japan faced destabilising factors that were becoming "more tangible and acute".
Concerns over issues of territory, sovereignty and maritime economic interests were rising amid "clearer trends" among neighbouring nations to modernise and bolster military capabilities.
The report highlighted China's "assertive actions with regard to issues of conflicts of interest in the maritime domain, as exemplified by its attempts to change the status quo by coercion".
It pointed to China's declaration last year of an air zone over the disputed East China Sea islands as a particular cause for concern.
Japan said that China, by frequently intruding into Japan's territorial waters and violating its airspace, had "engaged in dangerous activities that could cause unintended consequences".
The number of times Japanese fighters had been scrambled to meet Chinese planes was "increasing dramatically", the paper said.
"As Japan has great concern about these Chinese activities, it will need to pay utmost attention to them, as these activities also raise concerns over regional and global security."
On North Korea, the paper highlighted concerns over missile development which, it said, was "considered to have entered into a new phase as a result of technological improvements through repeated missile launches".
It was also "difficult to eliminate the possibility that North Korea has achieved the miniaturisation of nuclear weapons and acquired nuclear warheads", it added.
North Korea is widely believed to be working on making a nuclear weapon small enough to deliver via ballistic missile but it is not clear how close it is to achieving this goal.
North Korea's weapons' development, the paper said, represented "a serious and imminent threat to the security of Japan".
Because of the security challenges, the US military presence remained "extremely important in order to achieve regional stability", the paper stated.
Japan and the US have a long-standing security alliance and Japan is home to large US military bases.
Earlier this year, Japan also approved a landmark change in security policy that could allow its military to fight overseas.
Under its constitution, Japan is barred from using force to resolve conflicts except in cases of self-defence. But a reinterpretation of the law now allows Japan to use force to defend allies under attack.
In the white paper, Japan said the change was a response to a "fundamentally transformed" security environment in which an armed attack against a foreign country could potentially threaten Japan.
There was no immediate response from China to the white paper. South Korea, meanwhile, condemned a Japanese reference to a different group of islands that both Tokyo and Seoul claim.
Source: BBC