China to allow tourism in disputed islands in South China Sea.

In a move that could exacerbate tensions with its neighbours, China has announced plans to allow tourist cruises to disputed islands in the South China Sea, also claimed by Vietnam.

China is scheduled to let tourists visit the Xisha Islands, called by Vietnam as Paracel Islands in the South China Sea ahead of the forthcoming May Day holiday.

People will be allowed to visit the islands on cruise tours, Tan Li, executive vice governor of the southern-most province of Hainan said at the Boao Forum for Asia, state-run Xinhua news agency reported.

The announcement came as China's new President Xi Jinping in a speech called for peace and stability in the Asian region.

"Stability in Asia faces new challenges, as hotspot issues keep emerging and both traditional and non-traditional security threats exist," he said adding that no one should be allowed to throw the region into chaos.

The announcement was also made from Hainan, which forms part of the headquarters of China's South China Sea naval fleet, which began conducting aggressive patrols in recent months.

Since last year, China has been asserting its rights on the oil-rich islands which it has controlled since a short war with South Vietnam in 1974.

China claims sovereignty over almost the entire South China Sea and the claims have been strongly countered by Vietnam, the Philippines, Brunei and Malaysia.

Recently, even Thailand objected to maps on the Chinese passports with a U-shaped mark claiming swathe of the sea running in counter to exclusive economic zones under UNCLOS (UN Convention on the Law of the Sea) by other claimants.

Tan said details on the tour routes, capacity of tourist reception and cruise ships will be released at a later date.

Tourists will eat and sleep on the cruise ships and can land on the islands for sightseeing, he said.

Cruise tours are the choice as hotels and other facilities to accommodate tourists are inadequate, he said.

There is only one hotel with 56 rooms on the 2.13-square-kilometre Yongxing Island, the largest island among the group and home to the government offices of Sansha city which was established last summer to administer over 200 islets, sandbanks and reefs.

A cruise ship that can accommodate 1,965 passengers is ready for sailing, according to the ship owner.

"The tour prices will be relatively high due to the high costs of tourism infrastructure construction," said Huang Huaru, general manager of a tourism agency in Hainan.