BEIJING (Reuters) - Improving ties between the United States and Vietnam should not put peace and stability in Asia at risk, China’s state news agency said, as U.S. President Barack Obama began his first visit to Vietnam, which hopes Washington will scrap its arms embargo.

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Obama’s three-day stay in the country underscores the importance he places on expanding relations with Hanoi as part of his strategic “rebalance” towards Asia to counter China’s growing strength in the region.

Lifting the arms embargo on Vietnam, one of the last major vestiges of the Vietnam War era, would anger Beijing, which resents U.S. efforts to forge stronger military bonds with its neighbors amid rising tensions in the disputed South China Sea.

“It is welcome that Vietnam improves its ties with any other country, including the United States. However, such rapprochement should not be used by the United States as a tool to threaten or even damage the strategic interests of a third country,” the official Xinhua news agency said in a commentary late on Sunday.

Vietnam has said it would welcome the United States “accelerating” the lifting of a lethal arms embargo, and U.S. officials were finalizing a decision on the issue.

China claims almost all of the energy-rich South China Sea, through which more than $5 trillion of maritime trade passes each year. The Philippines, Brunei, Vietnam, Malaysia and Taiwan have overlapping claims.

U.S. engagement with Vietnam was stepped up rapidly during 2014, in what experts say was a calibrated move by the United States to seize on deteriorating ties between Vietnam and communist neighbor China over South China Sea claims.

Vietnam has been boosting its military deterrent as China intensifies its fortification of islands it controls.

U.S. actions have made some countries in the region more assertive and “fueled their delusions to continue to exploit illegal interests” in South China Sea, Xinhua said

Vietnam should be cautious in dealing with the United States, which “is motivated by an insincere agenda”, the news agency said.

“Given Vietnam’s industrial and military foundations, the United States has come to the belief that the Southeastern Asian nation could be suitable to help project Washington’s will over the South China Sea issue,” Xinhua said in a separate commentary.

(Story refiles to edit first paragraph.)