State media called the Permanent Court of Arbitration in the Hague a "puppet" of external forces, after it ruled that China had breached the Philippines' sovereign rights by endangering its ships and fishing and oil projects, Reuters reported.
China has repeatedly blamed the United States for stirring up trouble in the South China Sea, where its territorial claims overlap in parts with Vietnam, the Philippines, Malaysia, Brunei and Taiwan.
"China will take all necessary measures to protect its territorial sovereignty and maritime rights and interests," the ruling Communist Party's official People's Daily said in a front page commentary on Wednesday.
The case, overseeing an energy-rich region that is home to also one of the world's busiest trade routes, has been seen as a test of China's rising power and its economic and strategic rivalry with the United States.
Beijing called the Philippines claims of sovereignty in the South China Sea "baseless" and an "act of bad faith". In a government white paper published on Wednesday China also said its fishing boats had been harassed and attacked by the Philippines around the Spratly Islands.
"On whether China will set up a air defense zone over the South China Sea, what we have to make clear first is that China has the right to...But whether we need one in the South China Sea depends on the level of threats we face," the Vice Foreign Minister Liu Zhenmin told reporters in Beijing, adding that China hopes to return to bilateral talks with Manila.
"We hope that other countries don't use this opportunity to threaten China, and hope that other countries can work hard with China, meet us halfway, and maintain the South China Sea's peace and stability, and not turn the South China Sea in a source of war," Liu said.
U.S. officials have previously said they feared China may respond to the ruling by declaring an air defense identification zone in the South China Sea, as it did in the East China Sea in 2013, or by stepping up its building and fortification of artificial islands.
China's Liu also took aim at the judges on the tribunal, saying that as not one of them was Asian they could not possibly understand the issue and it was unfair of them to try.