"It is important to manage the conflicting points," Chinese Vice Foreign Minister Fu Ying said in a speech on "China's peaceful development and international environment" in Hong Kong on Monday.

"It takes diplomatic wisdom from China, from Vietnam and from the Philippines to make sure that our differences will be contained, well-managed and we will be able to not allow the differences to affect our relationship.

"You could see we are moving in that direction," she said, acknowledging the countries in the territorial dispute all felt strongly about their claims.

China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan have overlapping claims to parts of the South China Sea, which is believed to have vast oil and gas deposits, while its shipping lanes are vital for global trade.

Vietnam and the Philippines have in recent months accused China of taking increasingly aggressive actions in staking its claims.

In May, Vietnam said Chinese marine surveillance vessels cut the exploration cables of an oil survey ship inside Hanoi's exclusive economic zone.

And Philippine President Benigno Aquino has accused China of inciting at least seven recent incidents, including one in which a Chinese vessel allegedly opened fire on Filipino fishermen.

In response, China has insisted it wants to resolve disputes peacefully but remains firm in its claims to most of the South China Sea, even waters within the Philippines' economic exclusion zone.

Fu also defended the Asian giant's military build-up, in a bid to dismiss fears following recent reports that China was building its first aircraft carrier amid tensions in the South China Sea.

"The Chinese defence development is going along with the progress of the country," she said.

"It is relatively weaker, it is not one of the strongest yet. The alarm on Chinese defence development is a bit blown out (of proportion)."

Chinese top military officials reportedly confirmed in June that Beijing is building a huge aircraft carrier, a remodelled Soviet-era vessel, in its first acknowledgment of the ship's existence.

Agence France Presse - July 11, 2011