For the first time in 29 years, the 21 countries in the Asia Pacific Economic Cooperation (APEC) forum this week could not agree on a declaration to mark the 2018 meeting of leaders in Port Moresby, Papua New Guinea.
Walking back to their seats after a summit photo, Mr. Li told the vice president that China was still "a developing country", another US administration official said.
US Vice President Mike Pence - who attended on US President Donald Trump's behalf - later retaliated saying he was prepared to "more than double" the tariffs imposed on Chinese goods. "Those matters can be raised at the World Trade Organization".
A meeting of world leaders in Papua New Guinea has highlighted divisions between global powers the US and China and a growing competition for influence in the usually neglected South Pacific.
The APEC meeting was a battlefield cratered by verbal artillery exchanges between the Chinese and US delegations, with Xi complaining about "unilateralism" and "protectionism" and Pence vowing to "hold nations accountable for their unfair economic practices".
Mr Xi said the world is facing a choice between co-operation and confrontation as protectionism and unilateralism grows and added that the rules of global institutions set up after the Second World War such as the WTO should not be exploited for selfish agendas.
The US-China trade war has also been a constant theme throughout the week, with the situation coming to a head during Pence and Xi's speeches on Saturday, followed by the failure to gain consensus on Sunday.
Issues of trade - particularly reform of the World Trade Organisation, along with tariffs, intellectual property and artificial intelligence - are understood to have been the sticking points. "It goes beyond that to freedom of navigation in the seas, concerns about human rights".
Prior to Pence's comments, China's Xi Jinping lashed out at U.S. protectionism, labeling the United States approach as "short-sighted" and was "doomed to failure".
"We need to look at what Mahathir is doing, he has been very concerned about the future and sovereignty of Malaysia, he doesn't want the country to be a colony of China".
Speaking on Sunday, Long Yongtu, a former minister in China's foreign trade department, told a conference that China had been too politically driven in talks so far and should take a more pragmatic approach focused on the economic realities of the trade war.
"Our advice for the relevant country is that instead of pointing fingers at others, it would be better to match its deeds with its words and truly treat all countries, big or small, as equals", Chinese Foreign Ministry spokeswoman Hua Chunying said in a statement.
"This after I loudly and naggingly insisted he stay just one day".
No-one was known to be hurt, Kakas said, adding that he did not yet know how many police and soldiers were involved in the incident in the nation's capital Port Moresby.
In Port Moresby, the impact of China's aid and loans is highly visible but the USA and allies are countering with efforts to finance infrastructure in Papua New Guinea and other island states.
While noting that China has great power and wealth, Juffa said Papua New Guinea can choose to develop and modernise at its own pace to maintain its position as an independent nation.
The US$1.7 billion ($2.5b) project is aimed at helping Papua New Guinea achieve its goal of 70 percent access to electricity by 2030.