Bloomberg News

Major Powers Seek Sway at APEC Lured by Growth Potential

October 10, 2013

ASEAN Leaders

ASEAN leaders including Brunei's Sultan Hassanal Bolkiah, second left, and Thailand's Prime Minister Yingluck Shinawatra, third right, arrive for the 23rd summit of the Association of Southeast Asian Nations (ASEAN) in Bandar Seri Begawan on Oct. 9, 2013. Photographer: Roslan Rahman/AFP/Getty Images

Southeast Asian leaders pledged with China to avoid escalating tensions in the South China Sea as they work toward a code of conduct over the disputed waters rich in oil, gas and fish.

“We remain committed to resolving disputes peacefully in accordance with international law without resorting to the threat or use of force,” Association of Southeast Asian Nations leaders said in a statement today after their meeting with China in Brunei yesterday.

The statement didn’t give a time frame for further talks on a code of conduct for the waters that contain busy shipping lanes. Still, the comments reflect the softer tone China has adopted after a rise in tensions with countries such as Vietnam and the Philippines, and as China and the U.S. vie to boost ties in the region to seek new sources of growth.

Premier Li Keqiang said China wants to resolve disputes through dialogue, while again urging non-claimants such as the U.S. to stay out of discussions. “Countries that are not parties to the disputes should not get involved,” Li said in a speech to the broader East Asia summit today in Brunei. “Freedom of navigation in the South China Sea has never been an issue and will never be one.”

A code of conduct is needed in the longer term, and nations can lower the risk of miscalculation in the meantime, U.S. Secretary of State John Kerry told leaders at the East Asia summit. “The right to safe and unimpeded commerce, freedom of navigation, and respect for international law must be maintained,” Kerry said today. “The rights of all nations, large and small, must be respected.”

Obama Absence

U.S. President Barack Obama’s absence at summits in Bali and Brunei this week because of the partial U.S. government shutdown may give China space to press for more influence in the region. The meetings have been overshadowed by his absence and questions about the U.S.’s commitment to its so-called military and economic pivot to Asia at a time when civil war in Syria and Iran’s nuclear progam have kept him focused on the Middle East.

“It certainly sends the wrong signal, because the U.S. doesn’t even have the commitment to show up,” said Rodolfo Severino, head of the Asean Study Center at the Institute of Southeast Asian Studies in Singapore and secretary general of Asean from 1998 to 2002.

Kerry canceled a visit scheduled for tomorrow to the Philippines, which is embroiled in a dispute over fishing grounds with China. The visit was canceled due to possible bad weather, and Kerry pledged to travel to the country at a later date.

Asia Summits

The summits in Brunei’s capital of Bandar Seri Begawan come after leaders from the 21-member Asia-Pacific Economic Cooperation forum concluded meetings in Bali Oct. 8. They pledged to work together to revive growth while those involved in a key trade deal kept to a year-end deadline on completing talks.

The U.S. and China competed for influence with Asian leaders in Bali. Kerry -- standing in for Obama -- and Chinese President Xi Jinping each pledged to work with countries to boost trade and investment.

It’s too soon to tell if China is seeking real change in its ties, said Severino from the Institute of Southeast Asian Studies. “They have looked at the code of conduct as ineffective and would rather delay it,” he said. “I don’t think the Chinese are too interested in a code of conduct, the main reason being they don’t want to be contained in their actions.”

Debt Ceiling

Premier Li said during a meeting with Kerry yesterday that China is paying great attention to the U.S. debt ceiling issue, adding his voice to official concern that wrangling over a borrowing limit risks a default in the world’s biggest economy.

Li and Kerry had a broad conversation that briefly referenced the debt ceiling debate, a U.S. official said, asking not to be named because of government policy. Kerry reiterated that Obama is committed to resolving the government shutdown and Kerry and Li discussed their shared interest in a close economic working relationship, the official said.

“We reaffirm our opposition to trade protectionism,” Asean leaders said in their joint statement with China. “We will endeavor to achieve the goal of two-way trade of $500 billion by 2015 and $1 trillion by 2020, and two-way investment of $150 billion in the next eight years.”

‘Speaks Volumes’

A lack of specifics from the Brunei meetings on a code of conduct time line “is not important as the fact that China has agreed to partake in talks over a code of conduct itself speaks volumes,” said Gary Li, a senior analyst for IHS Maritime in Beijing. “China is still wary of U.S. involvement in the South China Sea, which is understandable considering that Vietnam and the Philippines have previously tried to lean on a reluctant U.S. to back them up,” Li said.

The region is estimated to have as much as 30 billion metric tons of oil and 16 trillion cubic meters of gas, which would account for about one-third of China’s oil and gas resources, according to Xinhua.

“We have seen the evolution in China’s position in terms of no longer objecting to any discussion on the code of conduct,” Indonesian Foreign Minister Marty Natalegawa said yesterday in an interview. “More than before, there is a greater common understanding that it is in the interests of Asean and the interests of China to make the political and diplomatic solutions work.”

Risks, Opportunities

Japan is also seeking to bolster its influence in Southeast Asia, while facing off against China in a separate territorial dispute in the East China Sea. Prime Minister Shinzo Abe said stability in the South China Sea is a concern for Japan and he was hoping for quick progress on the South China Sea code of conduct.

“Japan’s attitude of emphasis on Asean is not done with any particular country in mind,” Abe told reporters in Brunei today. “Both Japan and China share responsibility for stability in Asia and the global community.” Abe said he continues to seek meetings with the leaders of China and South Korea.

Abenomics in a Nutshell

Southeast Asia faces both risks and opportunities in being the object of attention by the major powers, said Chua Hak Bin, a Singapore-based economist at Bank of America Corp.

“Yet the inherent danger is that the desire for bilateral gains may come at the cost of sacrificing wider regional Asean interests,” he said.

Kerry met with Korea President Park Geun Hye in Brunei and told reporters he appreciated her “firm” approach in dealing with North Korea. He also mentioned China’s efforts to get North Korea to abandon its nuclear ambitions.

“China always insists on realizing denuclearization and maintaining peace and stability on the Korean peninsula,” Foreign Ministry spokeswoman Hua Chunying said at a briefing in Beijing today. “We urge all parties to do things that will help ease tensions and not the opposite.”

To contact the reporters on this story: Neil Chatterjee in Brunei at nchatterjee1@bloomberg.net; Indira A.R. Lakshmanan in Brunei at ilakshmanan@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net


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