Is the Chinese Navy targeting foreign vessels in the South China Sea? (VIDEO)

A report has emerged that the Chinese Navy has a flotilla of military vessels disguised as fishing vessels and hydrological data collection ships that are already being used to target ships of other countries.

The NDTV report emerged as China warned India that "outside forces" and "foreign companies" should not be involved in the South China Sea dispute, the Times of India reported.

The South China Sea dispute — the heart of which involves China laying claim to all of the resource-rich South China Sea, while several Southeast Asian nations claiming parts of it — figured in talks between Prime Minister Manmohan Singh and his Chinese counterpart Wen Jiabao last week at the East Asia summit in Bali, Indonesia. 

The East Asia summit was attended by leaders of the 10 members of the Association of Southeast Asian Nations (ASEAN) and their eight partners, including China, India and the United States. 

Regional security and economic interests were at the top of the agenda, no more so than for the US — with Barack Obama announcing a US military build-up in Australia.

(GlobalPost reports: Australians divided over more US troops Down Under; China bristles at US troop build up in Australia) 

The Huffington Post reported that:

The president's nine-day trip to Hawaii, Australia and Indonesia was marked by back-to-back summits and high-profile pronouncements, including decisions to station U.S. Marines in northern Australia, advocate a new free-trade area that leaves China out and call on Beijing not to buck the current world order.

Meanwhile, a Chinese foreign ministry spokesperson reportedly said Monday:

"We don't hope to see outside forces involved in the South China Sea dispute and do not want to see foreign companies engage in activities that will undermine China's sovereignty and interest."

The direct warning to New Delhi came days after India and China discussed the issue of oil exploration in the South China Sea, according to India's Economic Times.

Oil exploration activities by India's ONGC Videsh in the waters off Vietnam had recently irked China and the two countries had differences over the issue.

Beijing had also "waxed eloquent about China-India friendship" after the Wen-Singh meeting, the Times reported:

"There is no power in the world that can prevent the development of bilateral relations between the two countries," said foreign ministry spokesman Liu Weimin.

The Times interpreted that as an "obvious signal" to New Delhi to "keep the United States out of the picture" and instead develop bilateral relationship and settle disputes — including over ONGC's investment in oil exploration — between themselves. 

Liu reportedly said India needed to focused on upholding "the larger interest of regional peace and stability, and do more things that will contribute to mutual trust and cooperation."