Taiwan will "avoid confrontation and maintain peace and stability," but will not give in to "Chinese pressure," added the leader.
Taiwan's President Tsai Ing-wen has accused China of fomenting conflict in the region and guaranteed it will not relinquish sovereignty or a "free and democratic" way of life.
Tsai Ing-wen, speaking to 56 foreign delegations and 416 guests at National Day celebrations, described the Asian giant as "destabilizing the region" and vowed to respond by strengthening "security and economic power."
Taiwan will "avoid confrontation and maintain peace and stability," but will not yield to "Chinese pressure," the leader added.
The island, where the former Chinese government took refuge after the Communist Party seized power on the continent in 1949, and which continues to bear the name of "Republic of China" (without the adjective "Popular") - is seen by Beijing as a province of China rather than a sovereign political entity.