China and East Timor have upgraded bilateral ties to a comprehensive strategic partnership, potentially giving Beijing more influence in the region while satisfying the young half-island nation's desire for stronger ties with major economies.

The agreement to enhance relations came after China's President Xi Jinping met with East Timor's Prime Minister Xanana Gusmao in the eastern Chinese city of Hangzhou ahead of the opening ceremony of the Asian Games, the Chinese foreign ministry said in a statement on Saturday.

"Both sides will increase mutual support and strengthen international cooperation," said Xi.

Last year, when Jose Ramos-Horta was inaugurated as East Timor's fifth president since the country's independence in 2002, the Nobel laureate pledged to forge closer relations with China, especially in energy, agriculture and infrastructure.

He said he would continue to foster a relationship with the United States, but added that East Timor would not be implicated in any rivalry between Beijing and Washington.

East Timor welcomes strong ties with all countries, including its southern neighbour Australia, Ramos-Horta said last year.

Upgrading their ties, China and East Timor agreed to cooperation under the Belt and Road Initiative championed by Xi, that could open the way for investment in infrastructure.

Looking beyond Southeast Asia, China has built ties with small nations in the Pacific during recent years, worrying the United States and allies Australia and New Zealand, who have long seen the region as their sphere of influence.

China sent its military-run hospital ship to the Pacific in July to visit countries including East Timor and the Solomon islands.

In a joint declaration, released on state run China Central Television (CCTV) on Saturday, China said it would provide help for East Timor's economic and societal development.

Both sides agreed on close high-level military interactions, an expansion of bilateral investment, and cooperation in areas including infrastructure and food, the statement said.

The two governments also said they would strengthen energy policy exchange and study possibilities for joint exploration for oil and gas.

East Timor is looking to start producing natural gas from its Greater Sunrise fields around 2030, hoping to develop the offshore project that has been stuck in limbo for decades.

The development of the Greater Sunrise field is critical to the Southeast Asia island nation's economy as its main source of revenue - the Bayu Undan oil and gas field - stopped producing gas earlier this year.