There is "no other alternative" for the United States and China but to boost military-to-military relations to manage disputes, US Defense Secretary Leon Panetta said Saturday.

A robust security dialogue between the two powers is key to the prosperity of the Asia-Pacific region, Panetta told delegates to the Shangri-La Dialogue, a security conference held in Singapore annually.

"Our relationship with China -- we approach it in a very clear-eyed way. We are not naive about the relationship and neither is China," he said in response to a question after a speech.

"We both understand the differences we have, we both understand the conflicts we have but we also both understand that there really is no other alternative but for both of us to engage and to improve our communications and to improve our military-to-military relationship."

Panetta said there will be "ups and downs" along the way but it was vital to keep the lines of communication open.

"It's to build that kind of relationship recognising that we are going to have disputes... that we are going to have conflicts but also recognising that it is in the interest of both China and the United States to resolve these issues in a peaceful way," he said.

"That's the only key to advancing their prosperity and to advancing our prosperity."

Before arriving in Singapore on Friday, Panetta told reporters aboard his plane that he had come away encouraged about the state of the US-China security dialogue after recent talks with his Chinese counterpart and other officials.

He said both powers must go beyond the mutual distrust that often characterised relations in the past.

"I think what both of us have to recognise is that we are powers in this region. We have common interests in this region, we have common obligations to try to promote peace and prosperity and security in this region," he said at the Singapore summit.

Panetta told the conference Saturday the United States will shift the majority of its naval fleet to the Pacific by 2020 as part of a new strategic focus on Asia.

Amid a growing rivalry, US officials privately acknowledge that Washington's push for a larger military footprint in the Asia Pacific is designed to back up American diplomacy when confronting Beijing's assertive stance in the South China Sea.

But in his speech, Panetta insisted that Washington wanted dialogue with Beijing and not conflict.

"Some view the increased emphasis by the United States on the Asia-Pacific region as some kind of challenge to China. I reject that view entirely," he said.

"Our effort to renew and intensify our involvement in Asia is fully compatible... with the development and growth of China. Indeed, increased US involvement in this region will benefit China as it advances our shared security and prosperity for the future."

But in laying out core US principles in the region, Panetta made clear Washington opposed any attempt by Beijing to make unilateral moves in its push for territorial rights in the oil-rich South China Sea.

Disputes had to be resolved through agreed-upon rules among all countries and based on international law, he said.

He also alluded to US concerns over China's alleged cyber intrusions and spying, saying that in talks with Beijing the two sides had "agreed on the need to address responsible behaviour in cyberspace and in outer-space."