The Vietnamese statement confirmed that officials from Beijing and Hanoi had been meeting discreetly throughout the year to lay the foundation for a maritime settlement. The talks continued even as Hanoi successfully forced South China Sea issues back onto the agenda of the Association of South East Asian Nations, despite Beijing's opposition, while also drawing the United States and other regional powers into the equation.

The statement also outlines the importance of both bilateral and regional talks - even though Beijing has repeatedly demanded that territorial disputes must only be settled in a bilateral way.

Vietnam's Foreign Ministry spokeswoman Nguyen Phuong Nga said four rounds of talks had been held this year to seek agreement on 'fundamental guiding principles for addressing issues at sea.' Another round of talks was being planned later this month.

'Through these rounds, both sides have reached a significant perception that long-term and fundamental solutions to disputes on [the South China Sea] would be sought through peaceful negotiation in the spirit of mutual understanding and respect,' Nga said.

'During negotiation, both sides need to strive to maintain peace and stability in [the South China Sea] and to refrain from any action to complicate the situation, violence or threat of use of violence.'

The statement repeatedly refers to the 'East Sea', Hanoi's name for the South China Sea, and asserts Vietnamese sovereignty of both the Paracels and the larger Spratly Islands chain.

China and Vietnam claim both island groupings in their entirety, while Malaysia, the Philippines and Brunei claim the Spratlys in part. Taiwan's claim mirrors that of Beijing's.

The mostly tiny islands, heavily fortified with rival military bases, straddle the region's most important shipping lanes, linking East Asia with the Middle East and Europe, while the seabed holds potentially rich oil and gas reserves.

In Beijing, a Foreign Ministry spokesman did not deny the talks, but provided few details.

'We will announce the outcome of the [Sino-Vietnam] negotiation if we obtain related information,' he said.

Wang Hanling, an expert in maritime affairs and international law at the Chinese Academy of Social Sciences, said disputes in the Paracel Islands had been solved as the archipelago was now under China's administration.

'China will only talk about disputes involving the Spratly Islands with Vietnam and other countries,' Wang said.

'We encourage joint development in our economic exclusive zones even though we will not give any concessions. But there is a rule that China only accepts one-on-one negotiation, no third party or group talks are allowed.'

The talks confirmed by Hanoi are part of long-running Sino-Vietnamese efforts to solve lingering disputes after the two sides normalised ties 19 years ago - a decade after tensions between the fraternal allies exploded into a brief, but bloody, border war in late 1979.

The 1400-kilometre land border has been settled and marked in recent years and the sea borders of the Tonkin Gulf agreed, leaving only the mouth of the gulf and broader South China Sea disputes to be finalised.

Separate discussions are under way over the mouth of the gulf, while the navies of the two sides staged a recent joint patrol in the gulf itself as a confidence-building measure, despite recent tensions.

The Paracels, however, are considered a far more thorny issue. Once occupied by both China and the former South Vietnam, Chinese forces took control in a brief skirmish with the South Vietnamese navy just as Hanoi plotted its final offensive to take over the South in late 1974.

While the ill-fated Saigon regime protested to the UN, Hanoi stayed quiet, given its vital wartime relationship with its neighbour and ally, but has felt the loss keenly in more recent years.

Vietnam insists its fishermen still have the right to fish in the area, while China has arrested and detained hundreds of Vietnamese fishermen near the Paracels over the past two years - a campaign cited by US admirals fearful of growing Chinese assertiveness in the South China Sea.

Those fears saw Washington and its regional allies take a deeper interest in the issue in recent months, marked by US Secretary of State Hillary Clinton's statement at a regional security meeting in July that the US had 'national interest' in freedom of navigation through the area and the peaceful settlement of rival claims.

Later this month, China is due to host a working meeting with officials from the 10 Asean nations, including Vietnam, to map out a legally-binding code of conduct for the South China Sea until longer-term solutions can be found.

Diplomats believe any Sino-Vietnamese deal over the Paracels would make a regional settlement to the broader dispute far easier to achieve.

Significantly, the Vietnamese statement appears to attempt to leave an opening for a continued role for the US and other regional powers - a reflection of the rapidly-emerging strategic relationship between the two former enemies.

The statement notes that issues such as the Tonkin mouth and the Paracels involve only China and Vietnam and should be negotiated bilaterally.

'Issues that relate to other countries and parties, like the Spratly Islands, cannot be settled by Vietnam and China; they require the participation of other concerned parties,' Nga said.

'Issues that are not only related to countries that border the East Sea, such as maritime safety and security, must be negotiated and settled by all countries that share this common interest.'

She added that despite 'highly complicated' South China Sea issues, 'Vietnam and China will definitely find satisfactory solutions' to remaining maritime disputes.

Professor Carl Thayer, a scholar at the Australian Defence Force Academy and veteran South China Sea researcher, said news of the talks was highly significant.

'I'm amazed they've been able to keep it so quiet, given everything that happened this year,' he said. 'These negotiations over guiding principles are exactly how the land border settlement started to move forward. Once they are concluded, I would expect senior officials to come together and set a deadline for settlement.'

Peng Guangqian, a retired People's Liberation Army general and specialist in military strategy at the PLA Academy of Military Science, said there was 'zero chance' of China giving up its sovereignty in both Spratly and Paracel Islands.

'China has never changed its position on defending our sovereignty on the sea. It is Vietnam and other countries occupying most of the islets of our Spratly Islands,' Peng said.