Beijing has played down the prospects of conflict with the United States over the South China Sea in the wake of aggressive rhetoric by Donald Trump's administration, saying both sides would lose.

China asserts sovereignty over almost all of the resource-rich region despite rival claims from Southeast Asian neighbours and has rapidly built reefs into artificial islands capable of hosting military planes.

The islands are considered a potential flashpoint and recent comments from White House spokesman Sean Spicer and Secretary of State Rex Tillerson have raised the temperature.

But Chinese Foreign Minister Wang Yi said on a visit to Australia that war would benefit no-one.

"For any sober-minded politician, they clearly recognise that there cannot be conflict between China and the United States," he said in Canberra through an interpreter late Tuesday, the Australian Broadcasting Corporation reported.

"Both will lose and both sides cannot afford that."

Spicer last month said the US "is going to make sure we protect our interests" in the South China Sea while Tillerson said China's access to the islands might be blocked -- raising the prospect of a military confrontation.

Wang said the US-China relationship had defied "all sorts of difficulties" over decades and pointed to more recent statements by US Defence Secretary James Mattis that it was important to give priority to diplomatic efforts, ABC said.

On a trip to Japan last week, Mattis said Beijing "has shredded the trust" of regional countries with the military fortification of islands it controls, but balanced the message with a call for disputes to be settled through arbitration and diplomacy.

- Deep engagement -

After scheduled strategic dialogue talks with Wang, Australian Foreign Minister Julie Bishop on Wednesday said Beijing was keen for a close relationship with the Trump government.

"Beijing certainly welcomes a deep engagement with the United States," she told Sky News.

"They are looking forward to an era of cooperation, they see opportunity with the new administration to deepen the connections and as he (Wang) said, the United States and China have too much to lose for there to be conflict between them.

"My impression was that China is looking forward to engaging positively with the United States," she added.

Under President Barack Obama's administration, Washington insisted it was neutral on the question of sovereignty over the South China Sea islets, reefs and shoals.

But, while calling for the dispute to be resolved under international law, the US supported freedom of navigation by sending naval patrols through Chinese-claimed waters in a move supported by Canberra.

"We did discuss the South China Sea," said Bishop. "China is now deeply engaged in negotiations, discussions, consultations with the other claimants.

"Hopefully we'll continue to see both sides working very hard for peace and prosperity in our region."

China's island building programme in the South China Sea has irked neighbours -- many of whom also have claims to parts of the sea -- and caused global concern.

The Philippine defence secretary Delfin Lorenzana said Tuesday Manila expects China to try to build on a reef off the coast of the Philippines, adding this would be "unacceptable" in the flashpoint waterway.

Bishop urged Beijing to "play a responsible role, committed to the international rules-based order which has provided so much opportunity for peace, prosperity and stability" in its dealings in the South China Sea.