Antony Blinken, US Secretary of State, said China had taken "irresponsible steps" by halting key communication channels with Washington, and that its actions towards Taiwan showed a shift from prioritising peaceful resolution towards use of force.
His comments on Saturday came as Taiwan said manoeuvres by Chinese aircraft and warships simulated an attack on the island off China's east coast.
China began the military exercises on Thursday after US House Speaker Nancy Pelosi made a brief visit to Taiwan, ignoring warnings from Beijing against doing so. The live-fire drills, the largest yet conducted by China in the Taiwan Strait, are scheduled to continue until noon on Sunday.
China views Taiwan, which has been self-ruled since 1949, as a part of its territory that can be reclaimed by force if necessary.
On Friday, Beijing announced sanctions against Ms Pelosi and said it was halting dialogue with the US in a number of areas, including defence, narcotics, transnational crime and climate change.
Mr Blinken said China's decision would punish the world, not the US.
"Suspending climate co-operation doesn't punish the United States, it punishes the world, particularly the developing world. We should not hold hostage co-operation on matters of global concern because of differences between our two countries," he told a news conference in Manila on Saturday.
Mr Blinken said the US had been hearing concerns from allies about what he called China's dangerous and destabilising actions around Taiwan, but stressed that Washington would remain steady in its handling of the situation.
He said he had conveyed to China's Foreign Minister Wang Yi at a regional meeting in Cambodia that the US was determined to keep communication channels going to prevent miscalculations, as countries around the world expected them to.
"So let me be clear, the United States doesn't believe that it's in the interest of Taiwan, the region, or our own national security to escalate the situation," he said.
"We'll keep our channels of communication with China open, with the intent of avoiding escalation due to misunderstanding or miscommunication."
He said maintaining dialogue "is arguably even more important when we're in a period of heightened tensions".
"We seek to de-escalate those tensions. And we think dialogue is a very important element of that."
With reporting from agencies.