Vietnam has warned China not to drill for oil after Beijing moved a giant rig at the centre of a previous maritime standoff back into disputed waters.

The move comes a day before a crucial political transition begins in Hanoi as the communist leadership meets for its five-yearly congress.

China has moved the HY-981 rig into an "overlapping area of continental shelves between Vietnam's central coast and China's Hainan island", Hanoi's foreign ministry spokesman Le Hai Binh said late Tuesday.

Hanoi closely monitors the movement of the oil rig, which caused a high seas standoff and deadly anti-China riots in 2014 after it was deployed for several months in waters claimed by Vietnam.

"Vietnam asked China not to proceed with drilling activities and withdraw the oil rig out of the area," Binh said in a statement published online.

Beijing insisted Wednesday that the rig was operating in the "undisputed waters of China".

"We hope (the) Vietnamese side can view the matter calmly," China's foreign ministry spokesman Hong Lei told reporters at a regular briefing.

The development comes at a delicate time for Hanoi, with Vietnam's ruling communist party preparing for a leadership change at the upcoming party congress, a once-in-five-years event which starts Thursday.

The run up to this year's meeting has been marked by a bitter factional struggle between the party's traditional old guard, who are closer to Beijing, and more modern reformers like Prime Minister Nguyen Tan Dung.

Vietnam expert Carl Thayer said Beijing's move appeared "ill timed and counterproductive" coming ahead of the leadership transition.

"China just shot itself in the foot," he told AFP, warning the reappearance of the oil rig could give Dung -- who has been outspoken over the maritime dispute with Beijing -- a boost in support.

China last moved the HY-981 oil rig into contested waters in 2014, triggering protests and riots in Vietnam that left at least three people dead.

Since the rig incident, Vietnam has drawn closer to its former wartime foe America, with the US partially lifting a ban on lethal weapons sales in 2014.

Vietnam staunchly opposes China's ongoing efforts to develop airstrips and military bases on the island chains it controls in the South China Sea.

Its commercial fishing fleet routinely clashes with Chinese fisheries patrol vessels in contested waters from the northern Gulf of Tonkin to fishing zones around the Spratly Islands hundreds of miles further south.

Hanoi and Beijing frequently trade diplomatic barbs over disputed island chains and waters in the South China Sea.

The leadership's handling of its delicate relationship with China -- which is the country's largest trading partner -- is a frequent flashpoint for domestic criticism of Vietnam's authoritarian government.

China asserts ownership over virtually all of the South China Sea, putting it at odds with regional neighbours the Philippines, Vietnam, Malaysia, Brunei and Taiwan, which stake partial claims.