China and Southeast Asian countries have made significant progress in negotiations on a proposed agreement to prevent conflicts in the disputed South China Sea. However, the two sides will fail to finalise the pact by their previously agreed year-end deadline.

Three regional diplomats familiar with the negotiations said the parties had provisionally agreed on around 80 per cent of the proposed agreement's paragraphs following the latest round of talks last month.

China and the Association of Southeast Asian Nations (ASEAN) began negotiations on the proposed Code of Conduct (COC) in 2005. The agreement aims to prevent confrontations in the disputed waters from escalating into major conflicts that could threaten regional stability and economies.

The proposed code seeks to encourage restraint among the parties and discourage aggressive actions that could trigger clashes in the strategically important waterway, which is a major route for global trade.

After years of negotiations, China and ASEAN agreed in 2023 to accelerate the process and complete the talks by the end of 2026.

However, significant disagreements remain over the geographical scope of the agreement, the definition of certain sensitive terms and whether the code should be legally binding, the diplomats told The Associated Press. They spoke on condition of anonymity because they were not authorised to discuss the negotiations publicly.

The talks are expected to continue next year when Singapore takes over the rotating chairmanship of ASEAN.

The Philippines, which holds the bloc's chairmanship this year, increased the frequency of meetings to at least once a month to provide negotiators with more opportunities to resolve outstanding issues.

China and Malaysia, which currently oversees ASEAN's overall relations with Beijing, jointly led at least 10 major rounds of negotiations this year.

Progress on the proposed agreement and continuing incidents in the South China Sea are expected to feature prominently at the ASEAN leaders' annual summit, which begins in Manila this weekend. The regional leaders will also hold discussions with representatives from Asian and Western countries, including the United States and China.

China and four ASEAN members—Brunei, Malaysia, the Philippines and Vietnam—as well as Taiwan have long-standing territorial disputes in the strategically important waterway. The region is also believed to contain significant undersea oil and gas reserves.

Tensions have intensified in recent years, particularly between Chinese and Philippine coast guard and naval forces operating around disputed shoals.

In 1988, a confrontation between Chinese and Vietnamese forces over a disputed reef killed dozens of Vietnamese military personnel, marking one of the deadliest known clashes in the South China Sea.

Manila-based geopolitical analyst Julio Amador III said the proposed code alone might not be enough to prevent aggressive actions in the disputed waters. However, he said combining it with diplomatic initiatives and stronger military capabilities could make potential aggressors reconsider their actions.

“Restraining great powers takes a lot of effort,” Amador said, referring to China.

He added that countries needed multiple tools, including a code of conduct, legal action against China and increased military spending, to protect their interests.

The South China Sea remains a potential flashpoint in Asia and a sensitive arena of strategic rivalry between the United States and China.

Washington has repeatedly pledged to defend the Philippines, its oldest treaty ally in Asia, if Filipino forces come under armed attack, including in the South China Sea.

China, meanwhile, has warned the United States against getting involved, arguing that disputes in the region should be resolved by Asian countries.