Bali , Indonesia ( CNN ) -- Defense Secretary Leon Panetta praised China on more than one occasion Sunday during a series of meetings with fellow defense ministers from southeast Asia , but hinted if relations between the United States and China worsen , it could be a threat to `` the security of the world . '' He said he appreciates China 's muted response to the United States announcing a deal last month to sell more arms to Taiwan , and he lauded China for working with its neighbors with regards to the contentious issues involving the South China Sea . `` I would commend them for the way that they 've handled the news of that sale to Taiwan , compared to the past , '' Panetta told reporters after a meeting with Indonesia 's defense minister Sunday in Bali . China regards Taiwan as a renegade province . Taiwan began as the remnant of the government that ruled over mainland China , until a Communist uprising proved victorious in 1949 . The $ 5.3 billion arms package , announced last month , includes upgrades to Taiwan 's F-16 fighter fleet . Last year , a similar deal prompted China to temporarily cut off military to military relations with Americans . This time , aside from some strong objections voiced by Beijing , Panetta said there has been no tangible action taken in response by China . `` I 've heard nothing that indicates that they 're taking any steps in reaction to that , '' Panetta said . Part of the reason might be the way the United States government handled the sales . `` It was something that the United States had announced but we had given the Chinese a heads up as to what was going to take place , '' Panetta said . `` I think in the end ... they handled it in a professional and diplomatic way and we appreciate that. `` The South China Sea , a body of water east of Vietnam , north of Malaysia and west of the Philippines , has been a source of regional tensions for decades . But because of recent discoveries of massive oil reserves as well as its importance to regional maritime and aviation navigation , tensions have increased recently . Many countries lay claims to the same parts of the sea . After his meeting with the Indonesian defense minister , Panetta met with defense ministers from all eight member nations of ASEAN , the Association of Southeast Asian Nations , which includes all the nations that border the South China Sea , except China . In remarks prepared for the start of the meeting , Panetta said , `` I applaud the July accord between ASEAN and China on implementing guidelines to the 2002 declaration on the conduct of parties in the South China Sea . I would encourage you to maintain this momentum , and continue working towards a binding code of conduct . '' But Panetta said there are still some concerns regarding China 's military that bear watching . `` Obviously there are some concerns about some of the things they are doing on modernization , there are concerns about some of the things they are doing with some of the more sophisticated weapons that have been developed . '' He said China being open and letting the world know what its military is doing is key . `` As long as they are transparent , as long as we can discuss these issues on a frank and direct basis then I think we can develop a strong working relationship . '' He ended his discussion of China with the reporters on an ominous note about positive relations . `` I think it would be in the interest , not only in the interest of both nations , but also in the interest of the security of the world . ''
China handled news of U.S. arms sale to Taiwan well , Panetta says . Still , there are some concerns about China weapons program , he says . Comment: