However, a Chinese military official dismissed the comments as "irresponsible".
From left, U.S. Defense Secretary Jim Mattis, Japan's Defense Minister Itsunori Onodera and China's People's Liberation Army's Academy of Military Science Deputy President He Lei pose for photos at a ministerial roundtable on the sidelines of the 17th International Institute for Strategic Studies (IISS) Shangri-la Dialogue, an annual defense and security forum in Asia, in Singapore, Saturday, June 2, 2018, in Singapore.
In a dig at China, which the Pentagon has accused of using "predatory" economics to exploit neighbours, Mattis said the USA supports the peaceful resolution of disputes, "free, fair and reciprocal trade and investment" and adherence to worldwide rules and norms.
"Vietnam pursues a defensive and peaceful defense policy, does not take sides with one country against another country; does not use force for threaten the use of force", he said.
The United States is willing to work with China on a "results- oriented" relationship, but Beijing's actions in the South China Sea were coercive and the Pentagon would "compete vigorously" if needed, U.S. Defense Secretary Jim Mattis said on Saturday.
Beijing has deployed a range of military hardware including anti-ship missiles, surface-to-air missiles and electronic jammers across the South China Sea, where it has built islets and other maritime features into hardened military facilities, Mattis said.
The Philippines, Vietnam, Malaysia, Brunei and Taiwan also claim some of the hundreds of reefs and small islands in the sea but since 2014...
China has also landed heavy bombers on Woody Island in the Paracel Islands.
But in a quick pivot, he said the USA welcomes cooperation with China "wherever possible", and announced that he has accepted Beijing's invitation to visit there soon.
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"Currently so far it's a so-called new normal", Lin Chong-pin, retired strategic studies professor in Taiwan, said of the USA ship movement.
The previous week the USA had withdrawn an invitation for Beijing to participate in the exercise known as Rim of the Pacific.
China accused the USA of trespassing after two Navy warships sailed near a reef claimed by Beijing on Sunday. China protested the maneuver.
Mattis made clear that the US does not expect nations to choose between the USA and China, adding that Beijing should have a voice in shaping the region, while allies have a voice in shaping China's role.
At the same news conference, ministry spokesman Ren Guoqiang also confirmed China's development of its latest-model type 055 guided missile destroyer, which weighs 10,000 tons and features both stealth design and a land-attack capability.
The United States criticised the move and vowed to continue working to insure that the Indo-Pacific region remain "free and open".
But Chinese Lieutenant General He Lei issued a fiery response, telling the summit that "irresponsible comments from other nations can not be accepted".
Backing the remarks by his defense secretary, President Donald Trump said on Twitter, "Very surprised that China would be doing this?"
At least five French warships sailed through the South China Sea a year ago, according to the French defence minister.
Despite his criticism, Gen Mattis added that the United States would "continue to pursue a constructive, results-oriented relationship with China" with "co-operation whenever possible".