China demanded Thursday that Vietnam end oil exploration and stop its navy harassing Chinese boats in disputed waters near the Gulf of Tonkin, in the latest tit-for-tat between the neighbours.

Beijing's demands came after Hanoi complained on Tuesday that Chinese fishing boats had sabotaged a vessel owned by the Vietnamese energy giant PetroVietnam last week in the area.

"Vietnam's allegations are inconsistent with facts," said Beijing's foreign ministry spokesman Hong Lei, adding that the incident occurred outside the Gulf of Tonkin and near China's Hainan island.

"The Chinese boats were carrying out fishing production activities in that part of the sea, which is completely justified, and they were unreasonably dispelled by the Vietnamese naval ships.

"Vietnam should immediately stop unilateral oil and gas activities in that part of the sea and stop the interruptions of Chinese fishing boats."

Hanoi and Beijing have a long-standing territorial dispute over the Spratly and Paracel Islands, which both countries claim, and frequently trade diplomatic barbs over oil exploration and fishing rights in the South China Sea.

Hong said lengthy negotiations were continuing over the demarcation and joint development of the disputed waters where the latest incident took place, in the northwestern part of the sea.

According to Vietnam News, PetroVietnam's geological survey vessel, the Binh Minh 2, was operating in Vietnamese territorial waters on Friday when it was approached by a number of Chinese fishing vessels which cut its exploration cables.

Beijing must "immediately end this wrongdoing and not allow similar acts to re-occur", Hanoi's ministry of foreign affairs spokesman Luong Thanh Nghi said in a statement Tuesday, adding that the incident "violated Vietnam's sovereignty".

China's increasingly assertive stance in the South China Sea has raised tensions with other littoral countries as well as the United States.