Bali: Increasing and sometimes violent encounters between China and its neighbours with competing claims in the South China Sea are driving up shipping costs and risk getting "out of control," US Secretary of State Hillary Clinton warned Sunday, underscoring the urgency of peacefully resolving disputes over resources and territory in the strategic waters.

Speaking in Bali, Indonesia, where China and the Association of Southeast Asian Nations (Asean) took a first step toward establishing a binding code of conduct for the South China Sea last week, Clinton said that dangerous incidents were on the rise.

She said the international community has a vested interest in ending them because they threaten the stability, economic growth and prosperity of the entire Asia-Pacific. "The rest of the world needs to weigh in because all of us have a stake in ensuring that these disputes don't get out of control," Clinton told reporters at a joint news conference with Indonesian Foreign Minister Marty Natalegawa.

"We ... urge that Asean move quickly, I would even add urgently, to adopt a code of conduct that will avoid any problems in the vital sea lanes and territorial waters of the South China Sea.'

Clinton said increasing incidents of intimidation — such as the ramming of boats and cutting of vessels' cables — were ratcheting up tensions and raising the "cost of doing business".