In a conference in Jakarta, U.S. Deputy Secretary of State Antony Blinken warned China that its aggressive repossession of disputed territories in the South China Sea undermines freedom and stability, while provoking tension that may very well lead to conflict.

China currently claims 90 percent of the South China Sea, which is widely believed to hold rich oil and gas deposits. The country's claims overlap with those of its Asian neighbors like Brunei, Malaysia, Vietnam, Taiwan, and the Philippines, according to Reuters.

Recent satellite photos have shown that China has made significant progress in filling in land and building structures in the contested islands. The country has been shown to have built an airstrip suitable for military use in the Spratly Islands, a group of islands also claimed by the Philippines, according to The Business Insider.

"As China seeks to make sovereign land out of sandcastles and redraw maritime boundaries, it is eroding regional trust and undermining investor confidence," Blinken said during the conference.

"Its behavior threatens to set a new precedent whereby larger countries are free to intimidate smaller ones, and that provokes tensions, instability and can even lead to conflict," he added.

China's Foreign Ministry has demanded that the United States adopt a neutral stance in the territorial tensions in the South China Sea. He also said that the United States' comments damaged trust in the region, according to Reuters.

Ministry spokesman Hong Lei emphasizes that the statements made by the U.S. were uncalled for.

"The U.S. assumptions are groundless," he said.

Blinken, however, stated that competing claims by countries must be handled in a diplomatic manner, without any intimidation or bullying.

"We don't take sides but we strongly oppose actions that aim to advance a claim by force or coercion," he said.

"We will continue to encourage all claimants to resolve their differences in accordance with international norms," he added.