The writer penned an article for Spain's El Pais newspaper and La Republica in Peru in which he said the coronavirus outbreak would have played out differently if China was a democracy.
"No-one seems to be remarking that none of this could have happened in the world if popular China was a free country and democratic rather than a dictatorship," said the 2010 Nobel Prize in Literature winner.
That brought a furious rebuke from the one-party state that has been widely criticized by rights groups for brutally crushing dissent.
"We respect freedom of expression but that doesn't mean accepting arbitrary defamations and stigmatizations," said China's embassy to Peru in a statement.
The embassy called on Vargas Llosa "as a public figure, not to spread irresponsible and prejudiced opinions that serve no purpose."
Vargas Llosa, 83, noted in his article that "at least one prestigious doctor, and maybe several, detected this virus in plenty of time and instead of taking the corresponding measures, the government tried to hide the information and to silence that voice, or those sensible voices, and tried to stifle the information, as do all dictatorships."
Vargas Llosa also refered to the virus as "coming from China," which the embassy in Peru claimed was "inaccurate."
"The World Health Organisation (WHO) has so far not been able to identify the origin of COVID-19," said the embassy.
The virus is widely believed to have originated in a live animal market in Wuhan, the capital of China's Hubei province.
China first notified the WHO at the end of December about an unusual pneumonia it had detected in Wuhan.
A week later officials announced they had identified a new virus. It was another week before the first reported case appeared outside of China, in Thailand.
Some Chinese officials, though, have been promoting a wild conspiracy theory that the new coronavirus originated in the US.
China's Foreign ministry spokesman Zhao Lijian tweeted last week that "it might be US army who brought the epidemic to Wuhan."
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