China's assertion of sovereignty over the stretch of water off its south coast and to the east of mainland Southeast Asia has set it directly against Vietnam and the Philippines, while Brunei, Taiwan and Malaysia also lay claim to parts, making it Asia's biggest potential military trouble spot.
But Chinese Vice Foreign Minister Fu Ying said the dispute was well in hand, ahead of a meeting beginning this weekend of regional leaders in Cambodia attended by Southeast Asian heads of states as well as China's Premier Wen Jiabao and U.S. President Barack Obama.
"As soon as this region is bought up everyone thinks it's very dangerous, very turbulent, because of the South China Sea issue. In fact, over the past few years, China and the countries surrounding the South China Sea have successfully controlled the dispute and not let it intensify," Fu told reporters.
Asia's experience since the end of the Cold War of avoiding large-scale conflict showed that the South China Sea issue was also manageable, she said.
China, however, has resisted proposals for multilateral talks on the sea, preferring to try to negotiate disputes with each of the far less powerful individual claimants. It has also opposed Washington's attempts to get involved.
Unprecedented arguments over a push to introduce a code of conduct, or common approach, to territorial tension with China led to the collapse of a summit of Southeast Asian leaders in July, preventing the issuing of a joint communique by the Association of Southeast Asian Nations (ASEAN) for the first time in its 45-year history.
Indonesian Foreign Minister Marty Natalegawa said such disarray within the bloc could not be repeated.
"We cannot allow ourselves the luxury of a similar disunity," Natalegawa said in the Cambodian capital, Phnom Penh.
"It is bad for all involved, not only for ASEAN, it's even bad for China as well. So I think ASEAN and China are on the same boat literally on the South China Sea."
Officials at the summit are playing down any hope of progress on the code of conduct, though Indonesia proposed a hot line be set up between ASEAN nations and China for use in the event of any incidents.
"We have to be able to pick up the phone to share with another what had happened and how we can manage and contain the issue," Natalegawa said.
The stakes have risen in the area as the U.S. military shifts its attention and resources back to Asia, emboldening its long-time ally the Philippines and former foe Vietnam to take a tougher stance against Beijing.
Fu said over the past few years there had been a "phenomenon" of the South China Sea issue being "hyped up" whenever there was a regional or international meeting involving China and its ASEAN neighbours.
"Shattering the peaceful atmosphere in this way gives people the wrong impression."
"The dispute's resolution still has to come from talks with the countries directly involved. China and ASEAN are confident they can maintain peace and stability in the South China Sea, and we have already proved that we can do this," Fu said.
"We also hope that countries from outside the region, in other words countries which are not China or ASEAN members, can have faith in us. If you want to help, then do it in a positive way, and not interfere or provoke."
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
(Additional reporting by James Pomfret, Prak Chan Thul and Manny Mogato in Phnom Penh; Editing by Robert Birsel)