The United States and Vietnam said Saturday they hoped to upgrade diplomatic ties, days after a flare-up in tensions with China over Taiwan.

US Secretary of State Antony Blinken, passing through Hanoi on his way to a Group of Seven (G7) foreign ministers' meeting in Japan, met Vietnamese leaders on Saturday to pave the way for a potential diplomatic upgrade to a "strategic partnership".

The two countries have increasingly close trade links, while both share concern over China's growing strength in the region.

"We think this is an auspicious time to elevate our existing partnership," Blinken told reporters.

"We've had for the last 10 years this comprehensive partnership that has created an incredibly strong foundation of cooperation across many different areas. As a result, we think this is a good moment to go even further."

He said that their teams would be working on this "in the weeks and months ahead", adding that they were also finalising the transfer of a third US Coast Guard cutter to Vietnam, to "bolster Vietnam's capacity to contribute to maritime peace and stability in the South China Sea".

Analysts say Hanoi may be more reluctant to elevate relations, wary of upsetting Beijing despite rival claims in the South China Sea. Their neighbour to the north is also a key economic partner.

Vietnam's Prime Minister Pham Minh Chinh indicated that Hanoi had given the go-ahead for "elevating our bilateral ties to a new height".

The visit follows a call last month between US President Joe Biden and the head of Vietnam's ruling Communist party, Nguyen Phu Trong.

China completed military drills around Taiwan on Monday in its latest show of force against the self-governing island. The drills were staged as retaliation against Taiwanese President Tsai Ing-wen meeting lawmakers in the United States.

Blinken and US Defense Secretary Lloyd Austin held rare joint talks with their Philippine counterparts in Washington a day later following a deal for US forces to use a growing number of bases in the Philippines, including one near Taiwan.

The visit to Vietnam is Blinken's first as secretary of state. He also participated in a groundbreaking ceremony for a new eight-storey US embassy in Hanoi.

"This groundbreaking -- and the new embassy that we'll build -- represents another significant step toward strengthening a vital partnership between our countries and between our people," Blinken said.

The trip comes after the US called for the immediate release of Vietnamese journalist Nguyen Lan Thang, who was sentenced to six years in jail earlier this week for spreading "anti-state propaganda".

Vietnam has strict curbs on freedom of expression and the government moves swiftly to stamp out dissent and arrest critics, while independent media is banned.

Blinken said he continued "to underscore how future progress on human rights is essential to unleashing the full potential of the Vietnamese people".