"We are watching very closely events associated with" the recent Taiwan elections and inauguration, "and so far have seen no indication of an imminent military crisis," said Admiral Thomas Fargo, the chief of the US Pacific Command.
Speaking at a gathering of the US Association of Southeast Asian Nations (ASEAN) Business Council, Fargo said among his concerns in the region were "miscalculation" resulting in conflict in the Taiwan Strait and between nuclear rivals India and Pakistan.
"Such conflicts would be devastating in their own right, and would have the potential to expand into much wider regional conflicts," he warned.
Chen will be inaugurated for a second term as president Thursday against the backdrop of a bitter legal row over his election victory and threats from China to crush any moves towards independence "firmly and thoroughly, at any cost."
Chen has enraged China by repeatedly rejecting Beijing's offers of a "one country, two systems" formula for reunification, and describing Taiwan as a sovereign state.
The White House on Wednesday bluntly condemned China's warning, saying such harsh language has "no place in international civilized discourse."
China, which views Taiwan as part of its territory awaiting reunification with the mainland by force if necessary, has unleashed a wave of rhetoric this week warning it would never accept the island's independence.
Fargo reminded that the Taiwan issue was "the largest friction point" between the United States and China.
"We seek a peaceful resolution of Taiwan's status, free from the threat or use of force, as the only acceptable solution," he said, citing US support for the one-China policy and commitments under the Taiwan Relations Act.
The United States acknowledges Beijing's position that Taiwan is part of China and does not have official relations with the island.
However, Washington is bound by law to provide weapons to help Taiwan defend itself if its security is threatened.
China has threatened to invade Taiwan if it moves toward formal independence.
Fargo said it was clear China was using its rapid economic growth to fuel "unprecedented" military modernization, "which of course is concerning, because we don't know their intent."
He said he had found dialogues with China over the last two years to be much improved, adding such discussions could be "helpful to ensuring they get their assumptions right."
Fargo, who has been US military commander in the Asia Pacific for the last five years, said his "top concern" in the region was the potential for conflict on the Korean pensinsula.
He said "obviously the stakes in Northeast Asia would be particularly high if war occurred, and even higher if North Korea pursues its nuclear capability."