US Treasury Secretary Timothy Geithner met Chinese leaders on Wednesday to try to resolve yawning differences over sanctions on nuclear aspirant Iran, a major supplier of oil to the Asian giant.

Geithner's visit, which will also take in Japan, comes amid escalating international tensions over Iran's nuclear ambitions and a day after the United States accused Tehran of "blatant disregard for its responsibilities".

New US sanctions intended to put further pressure on Iran bar any foreign banks that do business with its central bank -- responsible for processing most oil purchases in the Islamic republic -- from US financial markets.

But Geithner is likely to encounter strong resistance from China, which buys 20-22 percent of Iran's crude oil, and has repeatedly opposed the sanctions.

Vice foreign minister Cui Tiankai warned this week against linking China's trade relations with Iran with Tehran's nuclear programme, saying Beijing's "legitimate concerns and demands should be respected".

A senior Chinese diplomat went further, warning of disastrous consequences if the Iranian nuclear row escalated into conflict.

"Once war starts in this region not only will the relevant nations be affected and attacked, it would also... bring disaster to a world economy deep in crisis," said Chen Xiaodong, a top diplomat on Middle Eastern affairs.

Meeting Vice-President Xi Jinping, who is tipped to take over as China's president next year, Geithner said the United States wanted to build trade ties with the world's second largest economy.

"We are looking forward to exploring opportunities to expand our exports to China and strengthen and deepen our cooperation with China on a broad range of economic and strategic issues," he said.

"On economic growth, financial stability around the world, on nonproliferation, we have what we view as a very strong cooperative relationship," he added.

Geithner is also expected to raise the issue of China's currency in meetings Wednesday with Xi and with Premier Wen Jiabao.

Washington argues that Beijing's decision to keep the yuan artificially low fuels a flow of cheap exports that helped send the US trade deficit with China to more than $270 billion in 2010.

But the sanctions are likely to top the agenda for his visit, which comes in the same week the UN atomic watchdog said Iran had begun enriching uranium to up to 20 percent at a new plant in a fortified bunker sunk into a mountain.

Iran, which insists its nuclear programme is for exclusively peaceful purposes, has repeatedly said it will not abandon uranium enrichment despite four rounds of UN Security Council sanctions demanding Tehran desist.

US Secretary of State Hillary Clinton said Tuesday the confirmation Iran was enriching uranium was "especially troubling", again calling on Tehran to cease all such work.

Russia, which has relatively close ties with Iran, has also voiced concern over the new plant, while China's foreign ministry said Monday that it had noted the reports.

China said this week Premier Wen would visit Saudi Arabia, Qatar and the United Arab Emirates, as the West's standoff with Iran intensified, pushing up oil prices.

Britain and France are also pushing for stronger economic sanctions to be imposed on Tehran to force it to abandon its nuclear programme, and European foreign ministers are set to agree on tougher sanctions later this month.

Tehran has threatened to block the strategic Strait of Hormuz if oil sanctions are imposed over its nuclear programme, sparking concern in both China and Japan, which depend heavily on Iranian oil.

Japan's Foreign Minister Koichiro Gemba, on a Gulf tour to seek assurances over oil supplies, said Tuesday he was "very concerned about the latest developments".

Japan's needs for oil and gas have increased after a massive earthquake and tsunami caused devastation and sparked a nuclear power crisis last March. The majority of its 54 nuclear reactors are now shut down.

Iranian oil accounted for nearly nine percent of Japan's power needs in the first 11 months of 2011 -- an issue that Geithner is expected to discuss with Japanese leaders.

The treasury secretary will hold talks with Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi in Tokyo on Thursday.