Confirming reports that Beijing's forces launched as many as four ballistic missiles during military exercises around the Paracel islands, the Pentagon said the move called into question China's 2002 commitment to avoiding provocative activities.

China's "actions, including missile tests, further destabilize the situation in the South China Sea," the Pentagon said in a statement.

"Such exercises also violate PRC commitments under the 2002 Declaration on the Conduct of Parties in the South China Sea to avoid activities that would complicate or escalate disputes and affect peace and stability," it said, referring to China by the initials of its official name, the People's Republic of China.

Over the past decade China has built up military installations on several disputed reefs and outcroppings in the South China Sea to assert its sovereignty over much of the region against territorial claims by Vietnam, the Philippines, Malaysia, Taiwan and Indonesia.

The Pentagon said the Chinese military's August 23-29 military exercises near the Paracels -- which it calls Xisha -- were "the latest in a long string of PRC actions to assert unlawful maritime claims and disadvantage its Southeast Asian neighbors."

It said the United States had urged China in July to reduce its "militarization and coercion" in the region.

Instead, "The PRC chose to escalate its exercise activities by firing ballistic missiles," it said.

Earlier Thursday Beijing blasted Washington over its blacklisting of two dozen state-owned Chinese companies involved in building and supplying China's South China Sea bases.

"The US's words grossly interfere in China's internal affairs... it is wholly tyrannical logic and power politics," said foreign ministry spokesman Zhao Lijian.

"China will take firm measures to uphold the legitimate rights and interests of Chinese companies and individuals," he said.