Liu Weimin, a spokesman for China's foreign ministry, Friday reiterated in Beijing that China has "indisputable sovereignty" over the South China Sea.
In a veiled warning to India, Liu said that New Delhi and Hanoi should "instead take positive steps to ensure peace and stability in the South China Sea", a thorny issue that is set to shadow bilateral ties and will be discussed in the forthcoming boundary talks.
New Delhi is not ready to be intimidated by what some here see as Chinese bullying.
India has defended the deal ONGC Videsh Ltd (OVL) signed for oil exploration with PetroVietnam in South China sea during the recent visit of Vietnam President Truong Tan Sang to India, saying the drilling was meant to be in Vietnamese waters.
Well-placed sources said the project was important for India's energy ecurity and it was doing nothing violative of international law.
But this hasn't stopped threatening statements from the state-controlled Chinese media, asking New Delhi to stay away from troubled waters.
Is there a Chinese strategy?
Well-placed sources said Beijing's maximalist plan was to force India to dump the oil project as China wants to control South China Sea, a disputed sea over which ir claims full sovereignty.
Last year, the Chinese drove out British Petroleum from drilling in South China Sea. But Beijing does not have an issue with companies which venture into South China Sea with Chinese blessing like Husky Energy of Canada.
"It's coercive diplomacy. They want to drive out OVL. But it does not like they will succeed," Srikanth Kondapally, a China expert at New Delhi's Jawaharlal Nehru University, told IANS.
"If the Chinese Navy attack ONGC facility, it could spark a war. I don't think China will physically evict OVL. They will continue the pressure," he said.
"One can expect Beijing to continue this war of words," said Kondapalli.
The issue of oil deal will figure in talks between special representatives of the two countries who meet here for the 15th round of boundary talks in a few weeks' time, said informed sources.
For now, the Chinese media is leading the charge to pressure India to back out of the deal it feels has a larger strategic design behind it.
"Both countries (India and Vietnam) clearly know what this means for China. China may consider taking actions to show its stance and prevent more reckless attempts in confronting China,” state-run English language Global Times said in a commentary.
It said India was willing to fish in the troubled waters of South China Sea so as to "accumulate bargaining chips on other issues with China".
China needs to respond with "firm retaliatory measures", it said.A Chinese trade magazine, published by the Communist party mouthpiece the People's Daily, warned that India was risking its energy security by going ahead with the oil deals.
"Challenging the core interests of a large, rising country for unknown oil at the bottom of the sea will not only lead to a crushing defeat for the Indian oil company, but will also most likely seriously harm India's whole energy security and interrupt its economic development," said China Energy News.