Fu said the defense figure - which compared with last year's 7.6 percent hike - will account for around 1.3 percent of the country's gross domestic product.
The figure was announced ahead of annual political meetings in Beijing.
"There was a view that China would increase its defense budget in line with the rise of the defense budget in the United States".
For most of the past 15 years, China's defence budget has grown by double digits annually, reflecting the country's economic growth.
China has been spending heavily on technologies, allowing it to project power far from shore, including aircraft carriers, long-range bombers and its first overseas military base located in the East Africa nation of Djibouti.
The slower pace has done little to calm nerves. However, Chinese military experts and Communist Party-controlled newspapers predicted the increase would go toward the navy.
PLA delegates to the NPC may be fuming over the smallest rise in military spending since 2010 and in the face of continued aggressive rhetoric from the US. "There is a huge gap between China and the United States in capability". Since Trump took office, however, Chinese officials have taken a cautious tone, emphasising the prospects for peace. USA activities, to a certain extent, are a barometer for the situation there.
Fu Ying on Saturday shrugged off questions about military investment.
"Look at the past decade or so, there have been so many conflicts, even wars, around the world resulting in serious, large numbers of casualties and loss of property, so many refugees destitute and homeless".
The country's entire defense spending a year ago accounted for less than a quarter of that of the United States. "The army's equipment is being upgraded".
Similarly, regarding the South China Sea, which has been a bone of contention between China and the United States, China continues to call and urge for a peaceful dialogue.
China has a long-term goal of "becoming a world-class military force, just like America", he said.
For countries concerned about China's military might and how it intends to use it, the Vice Minister responded that over the past decades and more the world has experienced crisis, leading to an increase in Internally Displaced Persons (IDPs) and wars, however, none of these sitiations were caused by China.
"In particular, we need to guard against outside meddling in the disputes", she said.
Last month Chinese military veterans demonstrated in central Beijing for two consecutive days, demanding unpaid retirement benefits in a new wave of protests highlighting the difficulty in managing demobilized troops.
Last year, USA warships conducted several freedom of navigation operations to counter what Washington sees as Beijing's efforts to limit access in the waters and also to challenge its "excessive maritime claims" in the South China Sea.
NBC News reported last month that the us response to China's moves in the South China Sea were becoming more aggressive as it deploys additional military hardware in the area.
Xin Jin and Congcong Zhang reported from Beijing.