It said China and Russian Federation had "added new types of nuclear capabilities to their arsenals, increased the salience of nuclear forces in their strategies and plans, and engaged in increasingly aggressive behaviours, including in outer space and cyberspace".
USA military institutions believe their current nuclear arsenal is too powerful to serve as an effective deterrent to other nuclear powers.
Daryl Kimball, the head of the Arms Control Association advocacy group in Washington, said that the development of new weapons in the US nuclear arsenal was "dangerous, Cold War thinking".
"The country that owns the world's largest nuclear arsenal, should take the initiative to follow the trend instead of going against it", China's defence ministry said on Sunday.
The report makes "wild guesses" about China's intentions and exaggerates the threat of its nuclear force, defence ministry spokesman Ren Guoqiang said in a statement.
The Pentagon said last week that the planned tactical warhead for some ballistic missiles and the reintroduction of a nuclear-tipped cruise missile would help to deter a limited nuclear strike. The assessment, known as a Nuclear Posture Review, mainly concerns United States nukes and missiles.
The US military wants to revamp its nuclear arsenal and develop new low-yield atomic weapons, largely in response to Russian actions in recent years, the Pentagon said.
The policy also recommends: Land-based ballistic missiles, submarine-launched missiles, and air-delivered weapons-to be extensively modernized, as begun under ex-President Obama.
Ren pointed out that the USA holds the world's largest stockpile of nuclear weapons and it needs to shoulder its own responsibility in stopping the proliferation of weapons of mass destruction.
The U.S. unveiled the strategy on Friday.
The review mentions that nuclear weapons could be used as retaliation in "extreme circumstances", not just as retaliation to a nuclear attack. "In a competitive situation, you also have to hold at risk, in this case, what North Korea holds dear, to remind them, 'Don't do it". "This eventually can lead in one thing and that's a major war".
China will resolutely stick to peaceful development and pursue a national defence policy that is defencive in nature, Ren said.
In 1970, the Treaty on the Non-Proliferation of Nuclear Weapons, or NPT, was ratified, and it was extended indefinitely in 1995.