China staged a remarkable come-from-behind win over Russia to bag the Athens Olympic gold medal three years ago.
After the 2004 Games, however, the national team suffered a string of losses to lowly ranked teams and slumped due to the veterans' injuries and the inexperience of the youngsters.
In the preliminary round of this year's Grand Prix, China finished a disappointing eighth, but automatically qualified for the finals in August as the host.
"There are emerging powerhouses like Italy and the US in recent years," Chen said. "It's more difficult for us to defend the title.
"But our fate is in our own hands. As long as those key players are back on track and younger ones show improvements in the remaining time, we are still one of the best teams in the world, and playing on home soil, we have nothing to fear."
Chen also dismissed reports suggesting he might retire after the Beijing Games.
"I never said I would quit after the Games. I know it's not an easy job. But it seems like destiny that I will have to undertake lots of difficulties in my coaching career.
"Just like four years ago, we faced difficulties and doubts after Zhao got injured. But we still overcame them all to stand on the top podium. I still have confidence in myself also in my players."
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