Taiwan has set up a unit to create a comprehensive Internet shield against hackers, its intelligence chief said Wednesday, in response to what it claims is a growing cyber threat from China.

Tsai Teh-sheng, head of the island's National Security Bureau, described the perceived cyber threat from China as "very severe" when asked to evaluate it in parliament by Kuomintang legislator Lin Yu-fang.

"The types of their Internet hacking are changing as their targets gradually diversify, ranging from military secrets, high-tech and business secrets to infrastructure," Tsai said.

"With the capabilities, they could sabotage Taiwan's infrastructure and spoil financial order whenever needed."

Tsai said that China had been stepping up its cyber attacks against the island to new levels that have alarmed President Ma Ying-jeou, the initiator of the detente with China.

"Top government officials have paid special heed to the issues. Both the National Security Council and the Cabinet have set up an information security office tasked with the development of an Internet shield," Tsai said.

Ties have improved markedly since Ma of the China-friendly Kuomintang party came to power in 2008 on a platform of ramping up trade and tourism links with the mainland.

Ma was reelected in January 2012 for a second and the last four-year term.

Yet China still considers Taiwan part of its territory awaiting reunification, by force if necessary, even though the island has ruled itself for more than 60 years after their split in 1949 at the end of a civil war.

The accusations from Taiwan come a day after security researchers told a United States congressional panel that China was pouring massive amounts of money and resources into cyber attacks aimed at stealing business secrets.

Last month, a report from US security firm Mandiant said a unit of China's People's Liberation Army had stolen hundreds of terabytes of data from at least 141 organisations, mostly based in the United States.

President Barack Obama weighed in on the issue last week, saying that cyber threats affecting US firms and infrastructure were increasing, and some were "state sponsored".

"We've made it very clear to China and some other state actors that, you know, we expect them to follow international norms and abide by international rules," he said in an interview with ABC News.

China's new premier Li Keqiang on Sunday rejected US accusations of hacking, saying that Beijing did not support cyber spying after Obama stepped up rhetoric on the issue.

"China itself is a major victim of cyber attacks," Li told a news conference. "China doesn't support cyber attacks. Indeed we oppose such activities."