The test came just hours before Secretary of State Rex Tillerson met with Chinese President Xi Jinping in Beijing.
Tillerson ended his first trip to Asia since taking office with an agreement to work with China on North Korea.
Rex Tillerson and Wang Yi.
North Korea said Monday it is not frightened by US threats of possible pre-emptive military action to halt its nuclear and missile buildup.
En route to Beijing, Tillerson visited U.S. allies Japan and South Korea where he declared Washington would drop the "failed" approach of "strategic patience" with Pyongyang - adding that USA military action against the North was possible.
Earlier Sunday North Korean state media said the isolated regime had tested a powerful engine hailed by leader Kim Jong-Un as a "new birth" for its rocket industry, which experts view as cover for developing intercontinental ballistic missiles.
And though his warnings about the possibility of eventual military action over North Korea have raised hackles here, Tillerson received a warm welcome from China's president on Sunday. "I will tell you he is acting very badly". The ruling communist party will hold its 19th national congress, which is expected to give Xi Jinping a second five-year term as head of the party, state and military.
North Korea in 2009 walked out of the talks hosted by China, and swore it would not return.
Xi said China expects to reach a consensus with Trump and to boost bilateral, regional, and global ties at all levels and properly address and manage sensitive issues. "China has done little to help!"
"The Trump administration is banking that threats of U.S. military action in South Korea and tougher sanctions on Chinese entities will intimidate Beijing into changing its policies", said Ashley Townshend, a research fellow at the United States Studies Center at the University of Sydney.
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Xi told Tillerson that China considered his meetings Saturday with Foreign Minister Wang Yi and top diplomat Yang Jiechi to have been productive and constructive.
Xi also invited Trump to visit China, it added.
At a press conference on Saturday with his Chinese counterpart, Tillerson noted that the USA would continue to raise thorny issues with China, including maritime disputes in the South China Sea, as well as human rights and religious freedoms.
Tillerson said Beijing and Washington agree that the situation on the Korean peninsula has "reached a rather risky level".
Wang said that includes strictly implementing United Nations sanctions on North Korea, while seeking a resumption of six-party negotiations, with the ultimate goal of ridding the Korean peninsula of nuclear weapons.
Chinese official also repeatedly say they do not have the influence over North Korea that Washington and others believe, and express fears poverty-struck North Korea could collapse if it were cut off completely, pushing destabilizing waves of refugees into northeastern China.
"But that way, China and North Korea will become enemies, further complicating the conflict".
A successful meeting could be crucial in setting the tone for the relationship between the world's two largest economies in coming years.
Officials who spoke on condition of anonymity have told AFP that Trump has tentatively agreed to host Xi at his Mar-a-Lago resort in Florida in early April.