The United States is encouraged by China's efforts to restrain North Korea but Washington will not accept Beijing's militarization of islands in the South China Sea, U.S. Defense Secretary Jim Mattis said on Saturday.

The comments by Mattis, during the annual Shangri-La Dialogue, show how U.S. President Donald Trump's administration is looking to balance working with China to restrain North Korea's advancing missile and nuclear programs while dealing with Beijing's activities in the South China Sea.

Trump has actively courted support from Chinese President Xi Jinping to restrain North Korea, raising concern among Asian allies that Washington might allow China a more free rein elsewhere in the region.

Speaking at the dialogue, Asia's premier security forum, Mattis said the threat from North Korea was "clear and present" and that Pyongyang had increased its pace of pursuing nuclear weapons.

The United States has struggled to slow North Korea's nuclear and missile programs, which have become a security priority given Pyongyang's vow to develop a nuclear-tipped missile capable of hitting the U.S. mainland.

The Trump administration has been pressing China aggressively to rein in its reclusive neighbor, warning all options are on the table if North Korea persists with its weapons programs.

"The Trump administration is encouraged by China's renewed commitment to work with the international community toward denuclearization," Mattis said.

"Ultimately, we believe China will come to recognize North Korea as a strategic liability, not an asset."

However, Mattis said seeking China's cooperation on North Korea did not mean Washington would not challenge Beijing's activities in the South China Sea.

"There is a lot more between (China) and the United States than just two issues. We are working with China on North Korea because that is also a problem for China."

The U.N. Security Council on Friday expanded targeted sanctions against North Korea after its repeated missile tests, adopting the first such resolution agreed by the United States and China since Trump took office.

In another sign of increased pressure on North Korea, Japan's navy and air force began a three-day military exercise with two U.S. aircraft carriers in the Sea of Japan on Thursday.

Japanese Defense Minister Tomomi Inada, speaking at the Singapore forum, said Tokyo backed the United States using any option to deal with North Korea, including military strikes, and was seeking a deeper alliance with Washington.