The U.S. is urging China, North Korea's biggest ally, to use its clout to help ease tensions after a missile launched into a South Korean island that killed four people.
Two civilians and two marines are dead and 18 more are wounded in the attack Tuesday on the tiny island of Yeonpyeong.
The charred bodies of the two civilians discovered Wednesday has ratcheted up tensions in region.
The two men, both in their 60s, were killed while on a construction site, a coast guard said.
The Obama administration says China is the only country that has influence over North Korea, but so far, the communist country has advocated for restraint but has remained mum on their position.
Chinese Foreign Ministry spokesman Hong Lei said they "regret the casualties and property losses, and are concerned about the situation."
"We strongly urge both sides retain calm and restraint and engage in talks as quickly as possible in order to prevent similar incidents from happening again," Hong said in a statement carried by state-run Xinhua news agency.
In a statement, Hong noted that "we have always maintained that the relevant parties should, through dialogue and consultation, resolve disputes by peaceful means."
However, State Department spokesman P.J. Crowley said the United States believes the attack is a "one-off, premeditated act" and doesn't believe there will be an extended military confrontation.
"China does have influence with North Korea and we would hope and expect that China will use that influence, first to reduce tensions that have arisen as a result of North Korean provocations and then secondly to continue to encourage North Korea to take affirmative steps to denuclearize," said Crowley.
United Nations Secretary-General Ban Ki-moon, who is from South Korea, called it one of the "gravest incidents" since the Korean War.
Shortly after the attack South Korea began mobilizing troops and building up forces in some areas.
It also suspended all aid and humanitarian deliveries to North Korea.
U.S. President Barack Obama said Wednesday a U.S. aircraft carrier had been dispatched from Japan to South Korea, saying the U.S. would "stand shoulder to shoulder" with the South.
The two countries will perform joint military exercises in the Yellow Sea between Nov. 28 to Dec. 1-- a clear sign Seoul is preparing for further escalation, should it occur.
CTV's Janis Mackey Frayer, reporting from Seoul, said Pyongyang was quick to react.
"There has been some very harsh words in return from North Korea, accusing South Korea of pushing the peninsula to the brink of war," she told CTV's Canada AM.
"It's the latest chapter in brinksmanship that has gone on for decades but it's certainly accelerated over the last number of months."
In Yeonpyeong on Wednesday, buildings continued to burn and residents were being evacuated to the mainland under a state of high alert.
The island, known for its crabbing industry, is located in western waters near the maritime border shared by the two nations.
Homes were destroyed, buildings were burned and windows were smashed in the area. One of the main targets appeared to be a supermarket that once housed offices of a military intelligence agency.
Locals said they had no warning of the attack.
"I heard the sound of artillery, and I felt that something was flying over my head," said Lim Jung-eun, 36, who fled Yeonpyeong island with three children, including a 9-month-old strapped to her back. "Then the mountain caught on fire."
Many spent the night in underground shelters before being evacuated to the port city of Incheon.
Mackey Frayer said there was a palpable sense of fear as evacuees described scenes of destruction reminiscent of the Korean War.
"In Seoul, the capital city, things are tense and there's a sense of dread," she said.
In Pyongyang, the North Korean capital, residents boasted that the exchange showed off their military's strength.
"I think this time our military demonstrated to the whole world that it doesn't make empty talk," Ri Pong Suk told TV news agency APTN.
Tensions have been simmering -- and occasionally boiling over -- in the Korean Peninsula since 1953, when the two countries signed a truce that ended the three-year conflict
In March, North Korea was accused of launching a torpedo that sunk a South Korean warship. In total 46 sailors were killed in the attack described as the worst in more than half a century.
However, Pyongyang denied any role in the attack.
In 1987 the North bombed a South Korean airliner in a notorious act of terrorism, killing 115 people.
In 1996, a group of North Korean spies killed three civilians and a soldier while interloping on South Korean territory.
