Tens of thousands of people have fled to China in recent months to escape the battles in Myanmar's restive borderlands.
The bloodshed has threatened to derail a push by de facto leader Aung San Suu Kyi to end decades of fighting with ethnic insurgents.
China's infantry, artillery and air force took part in Tuesday's exercise, the official Xinhua news agency said, adding the drills were part of annual training.
"The Chinese People's Liberation Army (PLA) forces on Tuesday staged an air-ground, live-fire drill in south China, close to the border with Myanmar," Xinhua said.
It quoted Colonel Fang Xin as saying the drill "demonstrated the PLA's resolve and will in safeguarding national security" and "protecting people's safety and their property".
Beijing held similar exercises in 2015 when several of its nationals were killed by stray rockets fired by Myanmar's army during a surge in violence in the Kokang border region in northeastern Shan state.
A ceasefire was announced between the military and rebel groups two weeks later.
This month Chinese authorities said a citizen was injured by a projectile that strayed across the border.
Observers believe Beijing holds significant sway over Myanmar's ethnic fighters and has been angling to increase its key role in the government's peace process.
China has called for an immediate ceasefire and officials have reportedly been holding talks with rebel groups in a bid to calm the fighting.
