With the diplomatic row between the global superpowers swiftly escalating, China's defence ministry denounced Washington's allegations on Tuesday as "a pure fabrication by the US, a move to mislead the public based on ulterior motives".
"From 'WikiLeaks' to the 'Snowden' case, US hypocrisy and double standards regarding the issue of cyber security have long been abundantly clear," the ministry said in a statement posted on its website.
On Monday night, Chinese assistant foreign minister Zheng Zeguang summoned US ambassador Max Baucus and lodged a "solemn representation" over the indictment.
China has also suspended co-operation with the US on cyber security issues and has issued an order prohibiting the use of Microsoft's Windows 8 operating system on all new government computers.
The move by the Central Government Procurement Centre is a bid to "ensure computer security", the official Xinhua news agency reported.
Beijing's furious response came a day after the US on Monday charged five members of a shadowy Chinese military unit for allegedly hacking US companies for trade secrets.
Cyber spying has long been a major sticking point in relations between the world's two largest economies but Washington's move marks a major escalation.
In the first-ever prosecution of state actors over cyber espionage, a federal grand jury indicted the five on charges they broke into US computers to benefit Chinese state-owned companies, leading to job losses in the US in steel, solar and other industries.
US Attorney General Eric Holder called on China to hand over the men for trial in the steel city of Pittsburgh and said the United States would use "all the means that are available to us" should Beijing refuse.
President Barack Obama's administration "will not tolerate actions by any nation that seek to illegally sabotage American companies and undermine the integrity of fair competition", Holder told reporters.
"This case should serve as a wake-up call to the seriousness of the ongoing cyber threat," he added.
The grand jury indicted each of the five — Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui — on 31 counts, which each carry penalties of up to 15 years' prison.
Prosecutors said the five officers belonged to Unit 61398 of the People's Liberation Army.
A report last year by US security firm Mandiant said the unit had thousands of workers operating from a nondescript, 12-storey building on the outskirts of Shanghai to pilfer intellectual property and government secrets.
China's foreign ministry rejected the US indictment as "absurd" and suspended the activities of a bilateral cyber working group announced last year by US Secretary of State John Kerry.
The State Department voiced regret over the move and said it expected a wide-ranging annual dialogue in July, for which Kerry is expected to visit Beijing, to go ahead as scheduled.