Lai's speech "exposed his hell bent position on Taiwan independence and his sinister intention to escalate tensions in the Taiwan Strait for political self-interest," China's foreign ministry spokeswoman Mao Ning told a regular press briefing.
China has not ruled out using force to bring the democratic island under its control, which Lai and his government oppose.
"Taiwan has never been a country and can never become one, so it does not have any so-called 'sovereignty'," Mao said.
She added that Lai's comments "arbitrarily severed the historical connection between the two sides of the Taiwan Strait" and used "all manner of tactics to peddle the fantasy of Taiwan independence".
In his speech, Lai pledged to defend the island's "national sovereignty".
But he also said Taipei's efforts to preserve the "status quo of peace and stability in the Taiwan Strait remain unchanged".
Beijing has ramped up pressure on Taiwan to accept its territorial claims and relations have remained tense under Lai, who took office in May.
And a senior US administration official said that China may use the National Day celebrations "as a pretext" for military exercises.
China maintains a near-daily military presence around Taiwan and has held three rounds of large-scale war games in the past two years, deploying aircraft and ships to encircle the island.
Beijing insisted following Lai's speech that "Taiwan is an inalienable part of Chinese territory" and that unification between the island and the mainland was "inevitable".
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