China and ASEAN make progress on a South China Sea pact but will not finish talks this year

China and Southeast Asian countries have made progress on a South China Sea pact but will not be able to conclude negotiations this year, regional diplomats said^1,3. The talks have run for decades^2,4, and the latest round leaves the agreement short of its deadline⁴.

The Philippines will host world leaders for the 49th ASEAN summit, and the South China Sea Code of Conduct is on the agenda⁶. The presidential palace in Manila has been silent on whether the code would be concluded before the end of 2026, which had been the deadline⁶. The diplomats’ assessment now answers that question: it will not¹.

The diplomacy around the summit

China’s premier will attend the summit in Manila^8,9. Ahead of it, China’s top diplomat Wang Yi urged the Philippines to rein in politicians who, in Beijing’s account, had repeatedly “smeared” China and crossed its “red lines”^8,9.

As host of next week’s summit, the Philippines wants to stop the South China Sea dispute from overshadowing issues the members share, analysts said⁷. Manila has moved to tone down anti-China rhetoric ahead of the talks, according to that analysis⁷. Even so, both sides describe progress on the pact, which leaves room for a statement at the summit short of a final agreement^1,5.

Why it matters to investors

The pact is meant to set rules of conduct in the South China Sea, where the Philippines and China are locked in a running dispute^6,7. A pact that keeps slipping past its deadlines leaves those rules unsettled after decades of talks^4,6. For governments and companies in the region, that means the dispute continues without an agreed framework¹.

The summit also tests how far the Philippines will go to keep relations with Beijing steady while it hosts the regional bloc⁷. Wang Yi’s warning about “red lines” shows that China expects Manila to restrain its own politicians⁹.

What to watch

The points to follow at the 49th summit are whether the leaders set a new target date for the code⁶, what China’s premier says in Manila⁸, and whether the Philippines keeps its rhetoric muted through the meeting⁷. Diplomats have already said a final agreement will not come this year¹.