Chinese construction on a South China Sea islet claimed by the Philippines would prompt "actions being taken" by the United States and other nations, US Defense Secretary Ashton Carter warned Saturday.

Speaking at a security summit in Singapore, Carter said Beijing risks building a "Great Wall of self-isolation" with its military expansion in the contested waters, but he also proposed stronger bilateral security cooperation to reduce the risks of a mishap.

"I hope that this development doesn't occur because it will result in actions being taken both by the United States, and actions being taken by others in the region that will have the effect of not only increasing tensions but isolating China," Carter said when asked about Scarborough Shoal in a forum also attended by senior Chinese military officials.

Hong Kong's South China Morning Post has reported that China plans to establish an outpost on the shoal, 230 kilometres (140 miles) off the Philippine coast, which Manila says lies in its exclusive economic zone.

Beijing claims nearly all of the strategically vital sea and has developed contested reefs into artificial islands, some topped with airstrips.

Manila says China took effective control of Scarborough Shoal in 2012, stationing patrol vessels and shooing away Filipino fishermen, after a two-month stand-off with the Philippine Navy.

The Post cited a source closed to the Chinese military as saying construction at the outpost would allow Beijing to "further perfect" its air coverage across the South China Sea, suggesting it plans to build an airstrip.

- 'Great Wall of self-isolation' -

The construction plans were likely to be accelerated in light of the upcoming ruling from the Permanent Court of Arbitration at The Hague on a case brought by the Philippines against China, which has shunned the proceedings and says it will not recognise any ruling.

In a prepared speech, Carter said the United States views the upcoming ruling "as an opportunity for China and the rest of the region to recommit to a principled future, to renewed diplomacy, and to lowering tensions, rather than raising them."

The Philippines, Brunei, Malaysia and Vietnam have competing claims in the sea, which encompass vital global shipping routes and is believed to have significant oil and gas deposits.

Beijing's claim to nearly the entire sea, based on controversial historical records, has also pitted it against the United States, which has conducted patrols near Chinese-held islands to press for freedom of navigation.

"Unfortunately, if these actions continue, China could end up erecting a Great Wall of self-isolation," Carter said in his speech.

The key to regional security, Carter said, was enhanced military cooperation across the region and the observance of "core principles" such as the peaceful resolution of disputes through legal means and the development of a "principled security network."

He also suggested the United States and China would benefit from better military ties -- both to build understanding and to avoid the risk of mishaps.

According to the Pentagon, two Chinese fighters last month conducted an "unsafe" intercept of a US spy plane in international air space over the South China Sea, further heightening tensions in the strategically vital waters.

"America wants to expand military-to-military agreements with China to focus not only on risk reduction, but also on practical cooperation," Carter said.

His attendance at the summit is part of a broader US diplomatic push, known as the Asia "rebalance", to build and maintain alliances in the Asia-Pacific region, which America sees as key to its own long-term economic and security interests.

In a report last month, the Pentagon said China put its land reclamation efforts on hold in the Spratly Islands chain at the end of 2015. Instead, it focused on adding military infrastructure to its reclaimed features.

In all, China has added more than 3,200 acres (1,295 hectares) of land to the seven features it occupies in the Spratlys, the report found, and it has added lengthy runways to three of these.