Chinese warships confronted the US Navy as President Donald Trump is trying to make peace with North Korea.
The hotly contested region is rich in fossil fuels, which China depends on to supply it’s booming economy with cheap energy.
China’s current operations in the region has been condemned by Washington for trying to take control of the strategically important seas.
Despite the naval drill being planned months in advance it comes at a sensitive time as the Pentagon had uninvited China from a major US-hosted naval drill.
The Higgins guided-missile destroyer and the Antietam guided-missile cruiser came within 12 nautical miles of the Paracel Islands, according to an American official who only spoke on the condition of anonymity.
The Paracel islands are part of a territorial dispute that China has with neighbouring countries.
One official said the US military vessels conducted manoeuvers near the Lincoln, Triton, Tree and Woody islands in the Paracels.
The Chinese Defence Ministry blasted the US saying they violated China’s sovereignty.
It said in a statement: “The move contravened Chinese and relevant international law, seriously infringed upon Chinese sovereignty and harmed strategic mutual trust between the two militaries.”
In another statement by China’s Foreign Ministry, it told the US to stop such military exercises.
It added: “China will continue to take all necessary measures to defend the country’s sovereignty and security.”
China has accused Washington of viewing Beijing in “Cold War” terms.
Chiefs from the Pentagon have continuously accused China of building up it military power in the South China Sea to gain control of oil and gas rich region.
Huge amounts of shipping sails through the region on toward seaport in North and South America.