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A Crucial Moment for Southeast Asian Diplomacy

The Association of Southeast Asian Nations (ASEAN) has moved closer to finalizing a long-awaited Code of Conduct (CoC) with China to govern behaviour in the disputed South China Sea, a maritime region marked by overlapping territorial claims, strategic rivalry, and immense economic value. ASEAN foreign ministers have signalled progress in negotiations, with the aim of concluding a binding and effective CoC by the end of 2026 — an objective that has been pursued for more than two decades.

The South China Sea dispute lies at the heart of Southeast Asian security concerns and broader geopolitical competition in the Indo-Pacific. With ASEAN scheduled to host high-level meetings and summits in 2026 — including attendance from global powers such as the United States, China, Japan, and Russia — the success or failure of CoC negotiations could reshape regional dynamics for years to come.

What Is the South China Sea Code of Conduct?

The South China Sea Code of Conduct (CoC) is a proposed framework intended to reduce tensions, prevent conflict, and establish clear norms for behaviour among claimant states and major external powers in the region. Its roots stretch back to the early 2000s when ASEAN and China agreed in principle to coordinate on a diplomatic approach toward peaceful conflict management in the volatile sea lanes.

For more than 20 years, ASEAN and China have engaged in intermittent negotiations to convert the aspirational Declaration on the Conduct of Parties in the South China Sea (DOC) — first agreed in 2002 — into a legally binding CoC that addresses key security, economic, and navigational concerns.

A CoC is expected to include basic “dos and don’ts” for state behaviour, mechanisms to avoid escalation of incidents at sea, and principles for resource exploration, maritime law enforcement, and military activity. However, key disagreements remain on its scope, legal bindingness, and enforcement mechanisms — all of which have complicated negotiators’ efforts.

ASEAN’s South China Sea Code of Conduct Negotiations & Regional Implications

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Why Now? ASEAN’s Renewed Push in 2026

In 2026, the Philippines holds the rotating ASEAN Chairmanship, and Manila has made the South China Sea CoC a central diplomatic priority. Philippine leaders have stressed the importance of concluding the agreement during their tenure to promote maritime security, peaceful dispute resolution, and regional stability.

Foreign ministers reiterated that they are in the “final phase” of negotiating the text, with the shared hope that a CoC could be finalized by the end of this year — more than two decades after initial discussions began.

However, analysts argue that despite progress, reaching a binding, substantive CoC remains highly uncertain. Divergent national interests within ASEAN and between ASEAN and China have repeatedly slowed progress. Some ASEAN members prioritize closer economic ties with Beijing, while others — like the Philippines and Vietnam — emphasize the need for a strong, enforceable text that constrains China’s assertive maritime actions.

The Stakes: Strategic Competition in the Indo-Pacific

The South China Sea is more than a maritime boundary dispute; it represents one of the most consequential geopolitical flashpoints in the Indo-Pacific region. This vast area is vital for global commerce, non-military transit, and energy security.

1. Strategic and Economic Importance

Roughly USD 3.4 trillion worth of global trade transits the South China Sea annually via key sea lines of communication (SLOCs). For nations in Southeast Asia and beyond — including India — freedom of navigation and overflight are foundational to economic prosperity. Failure to secure these principles could have far-reaching economic and security consequences.

The sea also harbours substantial energy resources and fishing grounds. Control over these resources — particularly by powerful claimant nations — enhances national leverage and strategic advantage.

2. Military and Security Competition

China’s expanding presence, including the construction of military outposts on various islands and reefs, has alarmed neighbouring ASEAN states and external powers. These actions — often perceived as coercive — have generated naval and coast guard confrontations, prompting ASEAN to insist on establishing behavioural norms to reduce the risk of escalation.

Challenges in Reaching a Binding CoC

ASEAN and China’s efforts to draft a binding CoC face several persistent hurdles:

1. Divergent National Interests Within ASEAN

ASEAN’s 11 member states span a range of geopolitical orientations, economic dependencies, and strategic priorities. Some nations, such as Vietnam and the Philippines, have deep disputes with China over sovereignty and resource rights. Others have closer economic interdependence with China and favour a more cautious, less confrontational position. This balance between unity and diversity repeatedly complicates ASEAN’s ability to adopt a single, firm stance in negotiations.

2. China’s Strategic Reservations

China remains wary of any agreement that could limit its expansive claims demarcated by the “nine-dash line” — a contested territorial claim that overlaps with the exclusive economic zones (EEZs) of multiple Southeast Asian nations. Beijing has reportedly opposed any CoC provisions that are legally binding or constrain its military and economic activities at sea.

China has also proposed limiting military exercises with external powers and restricting exploration rights to regional participants — positions that many ASEAN claimants find unacceptable.

3. Legal and Enforcement Questions

A core challenge is determining whether the CoC should be legally binding — and if so, how disputes over its interpretation and enforcement would be handled. ASEAN and China have previously agreed on accelerating negotiations through guidelines intended to speed up work toward an effective CoC, but binding enforcement remains elusive.

Legal bindingness is a sensitive subject: ASEAN claimants hope it would constrain aggressive behaviour, whereas China prefers more flexible, non-binding arrangements interpreted through its own lens.

Potential Outcomes: What a CoC Could — and Could Not — Achieve

If successfully concluded, a South China Sea CoC could:

✔ Provide a framework for predictable, non-conflict interactions at sea
A clear code could reduce the risk of accidental escalation by establishing agreed protocols for maritime conduct.

✔ Enhance ASEAN unity and credibility
Concluding a CoC would be a diplomatic milestone, signalling that ASEAN can act cohesively on major regional security issues.

✔ Anchor shared norms around freedom of navigation and dispute resolution
Explicitly including respect for international law — particularly UNCLOS — in the CoC helps legitimize peaceful dispute handling.

However, even with an agreement:

✖ A CoC may struggle to deter assertive actions
If enforcement mechanisms are weak or disputed, the document may have limited practical impact on preventing aggressive moves at sea.

✖ Fundamental sovereignty disputes would remain unresolved
A CoC focuses on behaviour management, not on resolving competing territorial claims, which could limit its ability to deliver lasting peace.

India’s Perspective and Strategic Interests

Although India is not a claimant in the South China Sea disputes, New Delhi has a significant stake in negotiations and outcomes:

1. Support for International Law and Rules-Based Order

India consistently emphasises freedom of navigation, unimpeded commerce, and respect for international law — especially the United Nations Convention on the Law of the Sea (UNCLOS). Indian leaders have reiterated that any CoC must be consistent with established legal frameworks and not prejudice the rights of nations outside ASEAN and China.

2. Economic and Maritime Connectivity

A secure South China Sea is vital for India’s economic links with Southeast Asia and beyond. Indian trade shipments to East Asia, ASEAN markets, and global partners transit these critical sea lanes. Disruption or militarisation of these routes would adversely affect India’s economic growth and supply chain resilience.

3. Strategic Partnerships and Regional Influence

India’s Act East Policy and participation in dialogues like the East Asia Summit and ASEAN Defence Ministers’ Meeting Plus (ADMM-Plus) reflect its commitment to deeper engagement with ASEAN and the Indo-Pacific. India has bolstered maritime cooperation with key littoral states and regularly participates in naval exercises, signalling support for regional stability.

India’s enhanced engagement also counters perceptions of China’s unchallenged dominance in the region — helping balance influence and reassuring ASEAN members that New Delhi is a reliable partner in maintaining a free, open Indo-Pacific.

Geopolitical and Economic Implications

1. U.S.–China Competition

The South China Sea is at the epicentre of strategic competition between the United States and China. ASEAN’s ability to negotiate a CoC that meets both regional expectations and Beijing’s conditions could influence broader dynamics in U.S.–China rivalry. A weak or non-binding agreement might embolden assertive postures, while a strong framework could reduce flashpoints that global powers might otherwise exploit.

2. ASEAN’s Centrality and Unity

ASEAN has long championed “ASEAN centrality” — the idea that the bloc should lead regional security and diplomacy. Concluding a CoC would bolster this principle, but persistent divisions could undermine ASEAN’s credibility and encourage external powers to assert alternative leadership roles.

3. Global Trade and Supply Chains

Any instability in the South China Sea affects global supply chains and investor confidence. Multinational corporations rely on predictable maritime routes for energy shipments, electronics, agriculture, and other goods. Progress toward a stable CoC can strengthen economic predictability; stagnation or breakdown could exacerbate market risk.

Conclusion: A Fragile Path Toward Peaceful Co-Existence

ASEAN’s engagement with China on the South China Sea Code of Conduct is one of the most complex and consequential diplomatic efforts in the region’s modern history. The potential for concluding an effective CoC by the end of 2026 — a goal articulated by regional leaders — remains uncertain but highly significant.

For ASEAN claimant states, a binding CoC represents a step toward reducing maritime tensions and preserving sovereignty. For China, it offers a chance to shape regional norms that accommodate its strategic interests. For India, alignment with international law, freedom of navigation, and strategic connectivity underpin its support for a stable, rules-based regional order.

While fundamental differences persist, ongoing negotiations reflect a shared recognition: without cooperative frameworks and predictable conduct at sea, geopolitical tensions could disrupt security, trade, and prosperity — not just in Southeast Asia, but across the broader Indo-Pacific and the global economy.