China and Vietnam on Tuesday held "candid" talks about who controls the islands in potentially oil-rich waters claimed by both nations, the official Xinhua news agency said.

Chinese President Hu Jintao and visiting Vietnamese Communist Party General Secretary Nguyen Phu Trong "spoke positively" about resolving their dispute over what China calls the South China Sea and Vietnam calls the East Sea.

China is Vietnam's largest trading partner but the communist neighbours have a long-standing dispute over sovereignty of the Paracel and Spratly island groups, which straddle vital commercial shipping lanes.

Hu and Trong agreed to maintain direct communications between the leaders of both countries.

Hu said neither side should take any action to "magnify or complicate the disputes, but instead deal with problems in a calm and constructive fashion," Xinhua reported.

Hu also called on China and Vietnam to consider common exploration of the waters and to take concrete action as soon as possible.

Trong said the maritime issues are just one part of Vietnam-China relations and that Vietnam would work with Beijing to implement their joint agreement on how to handle disputes over the waters.

Last week in Hanoi, a foreign ministry spokesman said "settling disputes in the East Sea is a long-term, difficult and complicated process requiring efforts and a practical and objective approach by both sides."

The two countries' relations sank to their lowest point in years in May and June when Vietnam said Chinese vessels twice interfered with its oil survey ships inside the country's exclusive economic zone.

Trong is in China until October 15.