Saudi Arabia cut ties with the Islamic Republic on Sunday following angry protests in Iran at the execution of a Shiite Muslim cleric, Sheikh Nimr al-Nimr, an outspoken opponent of the ruling Al Saudi family.
Tension between Iran and Saudi Arabia's conservative monarchy has run high for years as they backed opposing forces in conflicts across the Middle East.
"Like the international community, China is highly concerned about the developments and expresses concern that the relevant event may intensify conflict in the region," Chinese Foreign Ministry spokeswoman Hua Chunying told a regular news briefing, referring to the escalation in tension, according to Reuters.
The safety and dignity of diplomatic personnel should be guaranteed, Hua said.
"We hope the relevant parties can maintain calm and restraint, properly resolve their differences through dialogue and consultation and jointly safeguard regional peace and stability," she said.
The United States, Saudi Arabia's biggest backer in the West, encouraged diplomatic engagement in the region and called for leaders to take "affirmative steps" to reduce tension.
The US State Department also urged Saudi Arabia to respect and protect human rights and said Nimr's execution "risks exacerbating sectarian tensions at a time when they urgently need to be reduced".
China relies on the Middle East for oil supplies, but tends to leave diplomacy there to other permanent members of the UN Security Council -- the United States, Britain, France and Russia.