Chinese Foreign Ministry has summoned US Ambassador to descalate tension.
The US has been accused of 'hypocrisy' by China following the indictment of five Chinese military personnel on the grounds of cybertheft against American firms.
In Beijing, the Foreign Ministry has summoned US Ambassador Max Baucus amidst rising tensions in the hope of avoiding a larger diplomatic incident.
It was Monday when US authorities made the move to charge five Chinese military officers for cyber espionage.
The group, reportedly working for Chinese military cyber hacking unit 61398, targeted US firms to attempt to steal sensitive information to give Chinese competitors.
US assistant attorney general, John Carlin, said: "We allege that members of unit 61398 conspired to hack into computers of six US victims to steal information that would provide an economic advantage to the victims' competitors, including Chinese state-owned enterprises."
In a written statement on Tuesday, China's Foreign Ministry said: "It is widely known that the U.S. has for a long time been using its advanced technology and infrastructure to perpetrate large scale theft of secrets and eavesdropping against foreign political leaders, enterprises and individuals.
"This US move, which is based on deliberately fabricated facts, grossly violates the basic norms governing international relations and jeopardizes China-US cooperation and mutual trust. China lodged protest with the US side right after the announcement, urging the US side to immediately correct its mistake and withdraw the indictment.
"The position of the Chinese government on cyber security is consistent and clear-cut. China is steadfast in upholding cyber security. The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets. The US accusation against Chinese personnel is purely ungrounded with ulterior motives.
"The US government and relevant US institutions have long been involved in large-scale and organized cyber theft as well as wiretapping and surveillance activities against foreign political leaders, companies and individuals, which constitute a violation of international laws and basic norms governing international relations. The US acts are receiving wide- spread condemnation from all countries and the world opinion. China is a victim of severe US cyber theft, wiretapping and surveillance activities."