The United States is "seriously concerned" about NATO ally Turkey's controversial decision to select a Chinese company for its long-range air and missile defence system, the US ambassador said on Thursday.

"We are very concerned about a prospective deal between Turkey and Chinese firm that is sanctioned (by the United States)," ambassador Francis Ricciardone told reporters.

"Yes, this is a commercial decision... It's Turkey's sovereign right to make its own decisions about defence acquisitions or anything else," he said.

"There is no challenge, there's no disagreement between us but we are seriously concerned about what this means for allied missile air defence."

Ankara's announcement last month that it was launching discussions with the China Precision Machinery Export-Import Corporation (CPMIEC) for the deal -- worth $4 billion (2.9 billion euros), according to media reports -- irritated Turkey's allies in NATO, particularly the United States.

Ricciardone said Washington began expert-level discussions with Turkey in order to make sure the full facts about the Chinese company are taken into consideration.

"We are concerned but Turkey will make its own decision in line with the ... examination of the facts," Ricciardone said

"We are now dealing with a strategic mutual defence question," rather than a merely commercial question.

Turkish Prime Minister Recep Tayyip Erdogan on Wednesday defended his government's decision to enter talks with China but said no deal had yet been finalised.

"For the moment, China is offering the best conditions" including meeting Ankara's demand to co-produce the missiles, he said, but gave no date for a decision.

CPMIEC, which makes the HQ-9 missile system, beat out competition from a US partnership of Raytheon and Lockheed Martin, Russia's Rosoboronexport, and Italian-French consortium Eurosam.

The Chinese company has been hit by a series of US sanctions over the past decade, accused of selling arms and missile technology to Iran and Pakistan.

NATO said missile systems within the transatlantic military alliance must be compatible with each other.

"I feel confident Turkey is aware of this NATO position and... will take that into account before taking the final decision," NATO's chief Anders Fogh Rasmussen said Tuesday.

Ankara however brushed off NATO's concerns, with Erdogan saying that "member countries routinely have Russian arms and equipment in their inventories".

"No one has the right to intervene in (Turkey's) independent decisions," he said.

Turkey launched the tender for 12 missile batteries in 2009. It had previously defended the choice of CPMIEC saying it had offered the best price.