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Xi is widely expected to be elected as general secretary of the ruling Communist Party of China in a Party Congress in the coming weeks to succeed Hu.
Answering a question as to why the meeting between Xi and Clinton had not taken place, Yang told a joint press conference with Clinton that there need not be "unnecessary speculation" on it.
Differences between the two sides on resolving territorial disputes over the South China Sea were also highlighted during the press meet.
The US is calling on China and ASEAN countries to work out a code of conduct through a diplomatic process to resolve the South China Sea disputes involving China, the Philippines, Vietnam, Malaysia and Brunei.
China, however, continued to insist that it should be worked out through direct talks between respective parties.
About concerns over free navigation in South China Sea, Yang said, "For China and neighbours, South China Sea is a life line for trade and exchanges. There is no issue currently in the area, nor will there ever be (any) issue in that area."
Highlighting the American stand, Clinton said the US does not take a position on competing territorial claims. "Our interest is in the maintenance of peace and stability, respect for international law, freedom of navigation and unimpeded lawful commerce," she said.
"As a friend to the countries involved we do believe that it is in everyone's interest that China and ASEAN engage in a diplomatic process for the shared goal of code of conduct," she said.
Yang, however, stuck to Beijing's stand for direct talks. "China has sovereignty in islands in South China Sea and adjacent waters. There is plentiful historical and jurisprudential evidence for that," he said.
"As for the dispute over sovereignty over some islands and reefs in Nansha islands (also claimed by Vietnam), the overlapping rights and interest and claims over some waters of South China Sea, these should be discussed directly by concerned countries on the basis of respect to historical facts, international law, and settled through direct negotiations and friendly consultations," he said.
Yang said China and ASEAN countries should stick to Declaration of Conduct signed in 2002.
The parties should act according to DOC and work on a code of conduct, he said.
About concerns here that the US is attempting to contain China, Clinton said "our two countries are trying to do something that has never been done in the history, which is to write an answer (to the question) as to what will happen when an established power and rising power meet."
Outlining the "widest possible" dialogue mechanism devised by both countries to hold talks on global and bilateral issues on day-to-day basis, she said "we do not see eye-to-eye to everything. I do not expect anyone to imagine two counties as large as diverse as we are to see eye-to-eye."
"We have an embedded dialogue on cooperation to work through the differences. Our collaboration is vital," she said.
Clinton also said that the US-China differences on resolving the Syrian crisis continued.
"The US believes the simplest and best solution is to end the violence, followed by a peaceful political transition that respects dignity, aspirations and rights of the Syrian people" and wants to work with Beijing and others to end the crisis, she said.
Clinton's visit is part of ongoing six-nation tour, which started on August 30 and will also take her to the Cook Islands, Indonesia, East Timor, Brunei and Russia. She has visited Beijing for about six times after she took over the post in January 2009.