South Korean President Moon Jae-in warned North Korea not to use his nation's latest round of annual military drills with the USA as an excuse for any further provocations.
South Korea's Yonhap news agency reported that both Seoul and Washington had considered calling off an initial plan that would see two aircraft carriers move into the peninsula to take part in the drill in order to appease Kim Jong-un, the subject of "decapitation drills" in previous Ulchi exercises.
The head of the US military's Pacific Command said on Tuesday it was more important to use diplomacy to counter North Korea's missile threat rather than consider what actions by the reclusive North might trigger a preemptive strike.
A report Pyongyang has earned millions of dollars in exports seemed likely, meanwhile, to raise doubts about the impact of sanctions to pressure North Korea into dismantling its nuclear and ballistic missile programs.
North and South Korea are technically still at war after the 1950-1953 Korean War ended with a truce, not a peace treaty.
Tensions between the USA and North Korea have grown in recent weeks.
The annual drills are viewed by nuclear-armed Pyongyang as a highly provocative rehearsal for invasion, and it always meets them with threats of strong military counteraction.
There was no immediate reply from the North Korean delegate in the room.
The top United States military commander in the Asia-Pacific region said Tuesday that the diplomatic approach is the "stronger and more powerful" means to resolve the standoff with North Korea, adding such efforts should be backed by credible military capability.
Speaking in Beijing, Chinese Foreign Ministry spokeswoman Hua Chunying said North and South Korea and the United States all needed to make more effort to ease tension.
The Security Council unanimously imposed new sanctions on North Korea on August 5 that could slash its $3 billion annual export revenue by a third.
South Korean and USA forces began computer-simulated military exercises earlier on Monday amid tension over North Korea's weapons programmes, with the North saying it was watching the United States' every move.
U.S. Defense Secretary Jim Mattis said on Sunday the reduction in the number of U.S. troops taking part reflected a need for fewer personnel and was not because of tension with North Korea.
The North launched two intercontinental ballistic missiles in July and announced a plan to strike near Guam with four mid-range missiles.
This year, the US has scaled back the number of troops participating by about eight thousand, but Defense Secretary James Mattis says that's not because of heightened tensions.
Kim Jong-un has said, however, that conducting the annual war game in South Korea would be "pouring gasoline on the fire" of the already heightened tensions between Pyongyang and Washington.
The United States and South Korea began the long-planned exercises on Monday, called the Ulchi Freedom Guardian, which the allies have said are purely defensive.