By Ben Blanchard

BEIJING (Reuters) - China's defense minister said on Friday that he is willing to hold joint drills in the disputed South China Sea with Southeast Asian countries, covering accidental encounters and search and rescue, striking a conciliatory tone over an increasingly tense spat.

China's relations with several Southeast Asian countries, especially the Philippines and Vietnam, have been strained over Beijing's increasingly assertive tone in pushing territorial claims in the disputed South China Sea.

China has overlapping claims with Vietnam, the Philippines, Malaysia, Taiwan and Brunei in the South China Sea, through which $5 trillion in ship-borne trade passes every year.

Chinese Defence Minister Chang Wanquan told his counterparts from all 10 members of the Association of South East Asian Nations (ASEAN) at the start of an informal summit in Beijing that all parties needed to push for the "correct" development of ties.

Chang said the biggest common need was to maintain stability.

In a statement carried by the Defence Ministry on its microblog, Chang was cited as saying that all sides should manage and control the risks from their disputes.

China is willing to hold joint exercises with ASEAN nations next year in the South China Sea on rules about accidental encounters at sea, search and rescue, and disaster relief, the statement added, without providing further details.

China stepped up the creation of artificial islands in the South China Sea last year, drawing strong criticism from Washington.

The Philippines welcomed the possibility of joint naval drills with China, especially if they provide an opportunity to verify that China's man-made islands in the South China Sea have no military purpose, a senior naval commander told Reuters.

"That's a good idea, we welcome that proposal," the commander said, declining to be named because he was not authorized to speak to the media. "It would be good if China will open its artificial islands, allow us to dock there and visit these islands."

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Media reports say the United States has decided to conduct freedom-of-navigation operations inside 12 nautical-mile limits that China claims around islands built on reefs in the Spratly archipelago.

China denies it has militarized the South China Sea, saying construction work is mostly for civilian purposes, and has warned that Beijing would not stand for violations of its territorial waters in the name of freedom of navigation.

The United States says, under international law, that building up artificial islands on previously submerged reefs does not entitle a country to claim a territorial limit and that it is vital to maintain freedom of navigation.

Chang, speaking in front of reporters, said there were other areas to work together on, too.

"At present the regional situation is generally stable, but there are obvious downward economic pressures and non-traditional security challenges are increasing," he said, pointing to the threat from terror groups.

"Forces from outside the region are using the Internet, social media and other means to carry out incitements against countries in this region, threatening social stability," Chang said, without elaborating.

China says it faces a threat from Islamist militants in its far western region of Xinjiang, who it says often use the Internet to spread propaganda, link up with groups outside of China and encourage attacks.

(Reporting by Ben Blanchard; Editing by Edmund Klamann and Rachel Armstrong)