BEIJING (AFP) - China warned on Friday (Sept 22) that the situation on the Korean Peninsula was "grave" and called for restraint on all sides after North Korea hinted that it might explode a hydrogen bomb over the Pacific Ocean.

Beijing's appeal came as a war of words between Donald Trump and Kim Jong Un escalated, with the young North Korean leader calling the 71-year-old American president a "mentally deranged US dotard".

On the sidelines of the UN General Assembly in New York, North Korean Foreign Minister Ri Yong Ho told reporters Pyongyang might now consider detonating a hydrogen bomb outside its territory.

"The situation on the Korean Peninsula now is grave," Chinese foreign ministry spokesman Lu Kang told a regular press briefing in Beijing.

"All relevant parties should exercise restraint instead of provoking each other," he said.

"We believe that only if relevant parties meet each other halfway can they really solve the Korean Peninsula issue and truly realise peace and stability on the Korean Peninsula." China has repeatedly called for peace talks, suggesting that Pyongyang halt its nuclear activities in return for the United States suspending military drills in the region.