By Tim Kelly

TOKYO (Reuters) - Japan's annual defense review on Tuesday expressed "deep concern" over what it sees as China's coercion, as a more assertive Beijing flouts international rules when dealing with other nations.

Japan's Defence White Paper comes amid heightened tension in Asia less than a month after an arbitration court in the Hague invalidated China's sweeping claims in the disputed South China Sea, in a case brought by the Philippines.

China has refused to recognize the ruling. Japan called on China to adhere to the verdict, which it said was binding. Beijing retorted by warning Tokyo not to interfere.

In the defense review approved by Prime Minister Shinzo Abe's government, Japan warned that "unintended consequences" could result from Beijing's assertive disregard of international rules.

"China is poised to fulfill its unilateral demands without compromise," the government said in the review.

China's official Xinhua news agency condemned the review for hyping up the "China threat" theory, which aimed to tarnish the country's image.

In a statement, China's defense ministry said Japan sought excuses to step up military spending, accusing it of "evil intentions" towards China's legitimate defense needs.

"China's military is extremely dissatisfied with this and resolutely opposed to it," it said.

China claims most of the 3.5-million-square-km (1.35- million-square-mile) South China Sea, with Brunei, Malaysia, the Philippines, Taiwan and Vietnam also staking claims.

Japan has no territorial claims there, but it fears Chinese military bases will bolster Beijing's influence over a region through which $5 trillion in trade passes every year, much of it to and from Japanese ports.

Rather than confront China directly by sailing warships past its man-made island bases in the sea, Japan provides equipment and training to Southeast Asian nations, including the Philippines and Vietnam that are most opposed to China's territorial ambitions.

Beijing's most powerful adversary in Asia is the United States, with its Seventh Fleet operating from bases in Japan and South Korea. Japan has Asia's second-biggest indigenous navy..

The defense review noted China's growing capability to threaten naval vessels with its growing armory of anti-ship missiles.

At 484 pages, Japan's report is more than a tenth longer than last year's, and lays out other security concerns, such as the threat from neighboring North Korea's ballistic missile and nuclear bomb programs and a revival of Russian military strength in the Far East.

It takes 50 pages to outline Japan's deepening alliance with the United States, as Tokyo steps back from its war-renouncing constitution by easing curbs on overseas operations for its Self Defence Forces.

(Additional reporting by Ben Blanchard in Beijing; Editing by Clarence Fernandez)