Chinese Foreign Ministry spokesperson Hua Chunying told a media briefing that the issue should be resolved peacefully by India and Pakistan through dialogue.
India is permitted to construct the run of the river plants on western rivers with limited storage as per criteria specified in the treaty.
India and Pakistan on Monday held deliberations on issues relating to water sharing under the framework of the Indus Commission.
India slams Pakistan for 'unwarranted remarks' after FM Bilawal Bhutto Zardari rakes up Kashmir at UNSC
India's decision evoked strong reactions from Pakistan, which downgraded diplomatic ties and expelled the Indian envoy.
India has repeatedly told Pakistan that it desires normal neighbourly relations with Islamabad in an environment free of terror, hostility, and violence.
Shehbaz Sharif was sworn in as Pakistan's 23rd prime minister on April 11 after his predecessor Imran Khan was ousted in a no-confidence vote.
The Pakistan-based businessman said that disputes between countries should not impact bilateral trade and emphasised that there are 'many synergies' that could come into play.
Pakistan PM Shehbaz Sharif has written a letter to his Indian counterpart Narendra Modi pitching for meaningful engagement between the two countries.
Sharif emphasised that peaceful settlement of outstanding disputes including Jammu and Kashmir is indispensable
The Islamabad Security Dialogue is hosting 17 international speakers from the United States, China, the United Kingdom, Russia, European Union, Japan, Philippines and others.
India said a missile that landed in Pakistan two days back was fired accidentally due to a technical malfunction and it was deeply regrettable.
The talks were held in a very cordial environment and the final outcome of crucial parleys is expected to be announced on Thursday.