President Xi Jinping has called for the country's military to make technical and strategic "innovations" and to narrow the gap with other powers as new trends in warfare emerge.
Xi issued the call during a Politburo study session on Friday on how to adapt to changes in warfare, according to state media. The comments also come as China seeks to defend expansion of its strategic interests in disputed waters in the East and South China seas.
Xi said the People's Liberation Army must "strive to establish a new military doctrine, institutions, equipment systems, strategies and tactics and management modes" for information warfare that had become central to modern combat.
He added that operational thinking, combat forces and military management must be overhauled to reshape the military system.
In addition to the focus on innovation, Xi also highlighted three principles: the party should formulate an overall strategy to beef up its military strength; develop a new mindset for the different military wings to unite under a coherent strategy; and find ways to identify problems in the forces.
Xi said: "Faced with the severe challenges to our national security and stability and the deep-seated contradictions and problems with reform, it is even more pressing that we greatly liberate our ideas and concepts, have the courage to change our fixed mindsets of mechanised warfare and establish the ideological concept of information warfare."
Yue Gang, a military commentator and retired PLA colonel, said Xi's comments showed that he realised how much China trailed some developed countries in terms of modern warfare.
"It is clear that our country has developed a long way economically, but its military hasn't kept up," Yue said.
"He understands that to have a competitive army nowadays, merely having all the cutting-edge hardware - which we have been spending more money on - will not be enough. Our entire thinking needs to catch up with the rest of the world."
Xi heads the Central Military Commission, which controls the 2.3 million-strong armed forces, the world's largest.
In March, China announced its biggest rise in military spending in three years, a strong signal that it is not about to back away from its growing assertiveness in Asia, especially in disputed waters.
The increase appears to reflect Xi's desire to build what he calls a strong, rejuvenated China, even though the country has not fought a war in decades.
Xi also recently urged military leaders to speed efforts to get the country's sole aircraft carrier combat-ready.
Additional reporting by Reuters