Just days after China announced plans to grow its defense budget, the country's largest missile maker has started developing military drones with stealth abilities that can evade anti-aircraft weapons, local media reported Thursday. The move comes as China continues to advance in its military modernization program amid growing threats from its neighbors and the West.

"Drones have become an indispensable weapon in modern warfare because they can play an important role in high-resolution reconnaissance, long-distance precision strikes, anti-submarine operations and aerial combat," Wei Yiyin, deputy general manager of China Aerospace Science and Industry Corp, told the China Daily.

China has been working to develop new weapons, including stealth fighters and aircraft carriers but has clarified that its investment to upgrade its military prowess has no hostile intent.

Amid tensions with U.S. over the South China Sea, and the recent threats from North Korea after its missile launches, China, which is ranked third in the list of biggest military in the world has stepped up research into military drones.

China spends about $145 billion to defense and last week Chinese Premier Li Keqiang said that the budget will be increased by 7 percent, a spending enough to ensure Beijing remains the second-biggest defense spender in the world.

Tensions between China and the U.S. erupted after Beijing's island building and military advancement in the disputed South China Sea, through which over $5 trillion of maritime trade passes annually. Beijing claims most of the territory with Brunei, Malaysia, the Philippines and Taiwan, also making claims to the water.

China has also raised concerns over the U.S. and South Korea's military drills that have escalated the tensions with North Korea. The U.S. also has begun deploying its missile defense system, the Terminal High Altitude Area Defense system (THAAD), to the Osan Air Base in South Korea, despite warnings for Pyongyang.