The United States does not take a position on the rival territorial claims in the South China Sea, but says international law does not allow for sovereignty to be "manufactured" by building up underwater reefs.
Kerry said the United States had stated its concerns about the pace and scope of China's land reclamation in the sea.
"I urged China through Foreign Minister Wang to take actions that will join everybody in helping to reduce tensions and increase the prospect of a diplomatic solution," he said.
He said he believed he and Wang agreed the region needed "smart diplomacy" in order to conclude a code of conduct between the Association of Southeast
Asian Nations and China, "and not outposts and military strips" - an apparent reference to airstrips the United States believes China is building on reclaimed land.
Kerry said the United States and China had "a lot to accomplish together ... as two of the world's major powers and largest economies" and that millions of people around the world depended on them to ensure "high standards of behaviour and aspiration".
Wang said that while both countries had differences on the South China Sea, they were committed to freedom of navigation and peace and stability in the area and added that China hoped to continue a dialogue to improve understanding on the issue.
The South China Sea dispute is the latest source of friction between the world's two biggest economies, which have sparred over everything from trade and human rights to exchanges of accusations of hacking.
Despite this, they cooperate in many areas such as climate change, North Korea and Iran.
Recent satellite images have shown that since about March 2014, China has conducted reclamation work at seven sites in the Spratlys and is constructing a military-sized air strip on Fiery Cross Reef and possibly a second on another reef.
The Philippines, a U.S. treaty ally, has called for urgent action.
China rejects U.S. involvement in the dispute and has blamed the United States for stoking tension by encouraging countries to engage in "dangerous behavior". China has reiterated that the only way to address the issue is through bilateral talks.
On North Korea, Kerry said he was hopeful a potential nuclear deal with Iran could be a "message" for Pyongyang, but added that whether or not North Korea "is capable of internalizing that kind of message, that's still to be proven".
Kerry's trip is intended to prepare for annual U.S.-China Strategic and Economic Dialogue next month in Washington and President Xi Jinping's expected visit to Washington in September.