Chinese foreign ministry spokesman Geng Shuang said India and Pakistan are important South Asian countries but the "situation in Kashmir has attracted the attention of the international community."
India maintains that the Kashmir issue is a bilateral matter with Pakistan, and that there is no scope for third party mediation.
The Chinese comments aimed at getting involved in India-Pakistan tensions come at a time the armies of India and China are locked in a standoff in Doklam area in the Sikkim section.
Expressing concern over the tension between India and Pakistan, Mr Geng said "the conflict occurred near the Line of Control of Kashmir. This will not only harm the peace and stability of the two countries but also the peace and tranquility of the region."
"We hope the relevant sides can do more things that are conducive for peace and stability in the region and avoiding escalating the tensions and China is willing to play constructive role in improving relations between India and Pakistan," he told reporters.
Mr Geng's comments were in reply to a question on the tension between India and Pakistan, with the Organisation of Islamic Cooperation (OIC) expressing concern over the situation in Kashmir, and whether China can play a role to defuse the hostility between the two countries.
According to Pakistan Foreign Ministry, the OIC Council of Foreign Ministers, who met in Abidjan, Republic of Cote d'Ivoire, passed a resolution on Kashmir.
Indian security forces have been carrying out combing operations in parts of Kashmir to clear the areas of terrorists supported by Pakistan who launch attacks against them.
On Monday evening, terrorists targeted a bus carrying Amarnath pilgrims and killed seven of them, including six women, in Kashmir's Anantnag district. Lashkar-e-Taiba commander and Pakistani national Abu Ismail has emerged as the mastermind of the attack.