China has bolstered its presence in the South China Sea by setting up two administrative bodies on islands in the disputed water, dubbed "its youngest city".

Key points: China says it has established an administrative district on two islands

China says it has established an administrative district on two islands The two districts are under the control of China's Sansha city

The two districts are under the control of China's Sansha city The US has called on China to stop its "bullying behaviour" in the region

Beijing claims sovereignty over most of the South China Sea, directly challenging the territorial claims of its neighbours — the Philippines, Vietnam, Taiwan and Malaysia.

China has recently been pushing its presence in the energy-rich waters while other claimants are pre-occupied with tackling the coronavirus pandemic, prompting the United States to call on China to stop its "bullying behaviour" there.

On Saturday, Beijing said it had established an administrative district on the Paracel islands and another on the Spratly islands.

The two districts are under the control of China's Sansha city, according to China Global Television Network.

Chinese dredging vessels are seen in the waters around Mischief Reef in the disputed Spratly Islands in the South China Sea. ( Reuters/US Navy )

"As one of the youngest cities in China, Sansha city was established ... to administer the Xisha, Zhongsha and Nansha islands and their surrounding waters in the South China Sea," the official Chinese Military website states.

It adds that Sansha city only has around 1,800 permanent residents, with the smallest land area and population in China.

"The establishment of the so-called Sansha city and related activities seriously violated Vietnam's sovereignty," Vietnam's Foreign Ministry spokeswoman Le Thi Thu Hang said in a statement.

"Vietnam demands that China respect Vietnam's sovereignty and abolish its wrongful decisions."

A Chinese government survey ship was seen earlier this week tagging an exploration vessel operated by Malaysia's state oil company Petronas in the disputed waters, and remained offshore of Malaysia as of Sunday.

The competing territory claims in the South China Sea. ( ABC News: Illustration/Jarrod Fankhauser )

Earlier this month, Vietnam lodged an official protest with China after the sinking of a Vietnamese fishing boat it said had been rammed by a China Coast Guard vessel near the Paracels.

Last year, on a state visit to Vietnam, Australian Prime Minister Scott Morrison took a thinly-veiled swipe at Beijing's aggression in the South China Sea.

Mr Morrison used a speech he gave in Hanoi to emphasise the importance of an "open, inclusive and prosperous Indo-Pacific neighbourhood".

In 2016, an international court found China had no legal basis to claim historical rights in South China Sea.

Reuters