"The Department of Defense is concerned about China’s recent decision to conduct military exercises, including the firing of ballistic missiles, around the Paracel Islands in the South China Sea on August 23-29," it said in a statement released early Friday.

Conducting the military exercises is "counterproductive to easing tensions and maintaining stability," it said.

Vietnam has repeated asserted its sovereignty over the Paracel Islands, which it calls Hoang Sa. Its consistent stance is that all activities concerning the islands without Vietnam’s permission is a violation of Vietnam’s sovereignty and holds no value.

The Pentagon said China's actions "further destabilize the situation" in the sea, violate its commitments under the 2002 Declaration on the Conduct of Parties in the South China Sea to avoid activities that would complicate or escalate disputes and affect peace and stability, and call into question its motivations with ongoing negotiations for a Code of Conduct with ASEAN.

This military exercise is the latest in a long string of China's actions "to assert unlawful maritime claims and disadvantage its Southeast Asian neighbors in the South China Sea," the U.S. statement said.

The department said in July it had alerted China that it would continue to monitor the situation with the expectation that China will reduce its militarization and coercion of its neighbors in the sea.

As China chose to escalate its exercise activities by firing ballistic missiles, it now urges all parties to exercise restraint and not undertake military activities that could threaten freedom of navigation and aggravate disputes in the sea.

Earlier, a source close to the Chinese military said China launched two missiles, including an "aircraft-carrier killer," into the South China Sea on Wednesday morning, sending a clear warning to the United States, South China Morning Post reported.

The missile launches came one day after China said a U.S. U-2 spy plane entered a no-fly zone without permission during a Chinese live-fire naval drill in the Bohai Sea off its north coast.

On August 26, Vietnam requested China to cancel its naval exercises near the Paracels, adding it would complicate the East Sea situation.

Hainan Maritime Safety Administration announced on August 23 the Chinese army would perform drills on southeastern Hainan Island and Vietnam's Paracel Islands from August 24 to 29. It is the second time China has performed illegal drills near Hoang Sa within the last two months.

China seized Hoang Sa from South Vietnam by force in 1974, and has since illegally occupied the archipelago.