By Michael Martina and Ben Blanchard

BEIJING (Reuters) - Chinese President Xi Jinping told the military on Sunday to transform itself into an elite force, as he oversaw a parade with flybys of advanced jets and a mass rally of troops to mark 90 years since the founding of the People's Liberation Army.

China's armed forces, the world's largest, are in the midst of an ambitious modernization program, which includes investment in technology and new equipment such as stealth fighters and aircraft carriers, as well as cuts to troop numbers.

Xi presided over the large-scale military parade at the remote Zhurihe training base in China's northern Inner Mongolia region, where he inspected troops from the back of a jeep, an event carried live on state television.

Traveling down a long strip lined with tanks, missile launchers and other military vehicles, Xi, wearing military fatigues and a field cap, greeted thousands of troops.

Xi, who oversees the PLA in his role as head of the powerful Central Military Commission, repeatedly shouted, "Hello comrades!" and "Comrades, you are working hard!" into four microphones fixed atop his motorcade as martial music blared in the background.

The troops bellowed back: "Serve the people!", "Follow the Party!", "Fight to win!" and "Forge exemplary conduct!".

Tanks, vehicle-mounted nuclear-capable missiles and other equipment rolled by, as military aircraft flew above, including H-6K bombers, which have been patrolling near Taiwan and Japan recently, the J-15 carrier-based fighters and new generation J-20 stealth fighter.

"Today, we are closer to the goal of the great rejuvenation of the Chinese nation than any other time in history, and we need to build a strong people's military more than any other time in history," Xi told the assembled troops in a short speech that did not yield any new policy announcements.

Xi said that the military must "unswervingly" back the ruling Communist Party.

"Always listen to and follow the party's orders, and march to wherever the party points," he said.

Xi said that the world was not peaceful, but he did not mention any specific hot spots, such as territorial disputes in the South China Sea, Taiwan, or tensions over North Korea's nuclear weapons and missiles programs.

Unlike a massive 2015 parade through manicured central Beijing to mark 70 years since the end of World War Two, Sunday's spectacle had fewer frills.

Thousands of troop marched in combat garb, not dress uniforms, and vehicles kicked up clouds of dust as they rounded sections of the base's track.

It was the first time China has marked Army Day, which formally falls on Aug. 1, with a military parade since the Communist revolution in 1949, state news agency Xinhua said.

It was also the first time Xi has reviewed troops in the field like this, Xinhua added.

Chinese Defense Ministry spokesman Ren Guoqiang said in a statement that the location for the parade embodied a "dust-covered battlefield atmosphere" for the 12,000 troops who participated.

The country's military is more nimble and technologically proficient following reforms to make it more compact and responsive, and less reliant on its sheer troop numbers, Xi said last week.

China has not fought a war in decades and the government insists it has no hostile intent, but simply needs the ability to properly defend what is now the world's second-largest economy.

However, China has rattled nerves around Asia and globally with its increasingly assertive stance in the East and South China Seas and its military modernization plan.

Some of the military reforms have also been controversial at home. Sources with ties to the military say Xi's announcement at the 2015 parade to cut 300,000 troops has caused unease within the ranks.

(Reporting by Michael Martina and Ben Blanchard; Editing by Kim Coghill and Sam Holmes)