Major Powers Seek Sway at APEC Lured by Growth Potential

Photographer: Philippe Lopez/AFP/Getty Images

“Countries that are not parties to the disputes should not get involved,” Li Keqiang, China's premier, said in a speech to the East Asia summit yesterday. “Freedom of navigation in the South China Sea has never been an issue and will never be one.” Close

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Photographer: Philippe Lopez/AFP/Getty Images

“Countries that are not parties to the disputes should not get involved,” Li Keqiang, China's premier, said in a speech to the East Asia summit yesterday. “Freedom of navigation in the South China Sea has never been an issue and will never be one.”

China pledged to avoid escalating tensions while it works with Southeast Asian nations on a code of conduct for the South China Sea, as it again warned major powers such as the U.S. to stay out of its disputes.

“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 joint statement yesterday with China.

While the statement didn’t give a time frame for talks on a code of conduct for the waters rich in fish, oil and gas, 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 for influence in the region to secure new sources of growth. Japan joined the U.S. in urging restraint on the disputes which cover some of the world’s busiest shipping lanes.

China has sought to resolve the spats by talking with countries individually and in Brunei Premier Li Keqiang again called on non-claimants to stay out of discussions. “Countries that are not parties to the disputes should not get involved,” Li said in a speech to the East Asia summit yesterday. “Freedom of navigation in the South China Sea has never been an issue and will never be one.”

Photographer: Wang Zhao/AFP/Getty Images

A woman stands at the dock as a boat leaving for sail in the sea town of Tanmen, Hainan province. The South China Sea waters is rich in fish, oil and gas. Close

A woman stands at the dock as a boat leaving for sail in the sea town of Tanmen, Hainan... Read More

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Photographer: Wang Zhao/AFP/Getty Images

A woman stands at the dock as a boat leaving for sail in the sea town of Tanmen, Hainan province. The South China Sea waters is rich in fish, oil and gas.

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 yesterday. “The rights of all nations, large and small, must be respected.”

Japan Concerns

Japan is also seeking to boost its sway in Southeast Asia, while facing off against China in its own 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 hoped for quick progress on the code of conduct.

“Japan’s attitude of emphasis on Asean is not done with any particular country in mind,” Abe told reporters in Brunei yesterday. “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.

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 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 program have kept Obama focused on the Middle East.

‘Wrong Signal’

“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 Studies Centre at the Institute of Southeast Asian Studies in Singapore and secretary general of Asean from 1998 to 2002.

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

Speaking in Malaysia this morning, Kerry said Obama is making progress on the shutdown impasse, so “it was worth it” to stay and tackle that issue.

“What is happening in our capital is nothing more than a moment of politics, and it will pass,” Kerry said in a speech in Kuala Lumpur at a conference on entrepreneurship. “If only the small group of people who are holding us back were as forward-thinking and collaborative as the people in this room.”

Major Powers

The summits in Brunei came 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 also competed for influence with Asian leaders in Bali. Kerry 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.”

‘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 Oct. 9 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

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 yesterday. “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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