China and the Association of Southeast Asian Nations (ASEAN) have made significant progress in negotiations towards a proposed code of conduct for the South China Sea, but the parties will not complete the agreement by the end of 2026 as previously targeted.

Diplomatic sources told the Associated Press that negotiators had provisionally agreed on approximately 80 per cent of the proposed agreement’s paragraphs following the latest round of discussions in October. However, important disagreements remain over the geographical area the agreement should cover, the definition of sensitive provisions and whether the eventual code should be legally binding.

The proposed agreement is intended to reduce the risk of confrontations in one of the world’s most strategically important maritime regions. The South China Sea is a major international shipping corridor and is believed to contain substantial energy resources. China, Brunei, Malaysia, the Philippines, Vietnam and Taiwan are involved in overlapping territorial and maritime claims.

Tensions have been particularly pronounced between China and the Philippines, whose vessels have repeatedly confronted one another in disputed waters. The disagreements have raised concerns about the possibility of an incident escalating into a wider regional crisis.

The negotiations have involved sustained diplomatic engagement. The Philippines, which leads ASEAN in 2026, increased the frequency of meetings, while China and Malaysia jointly led at least 10 major negotiating rounds.

Despite the progress, the remaining disagreements demonstrate the complexity of reaching a binding regional arrangement. The talks are expected to continue next year under Singapore’s ASEAN leadership.

The negotiations also have wider implications for relations between China and the United States. Washington has reiterated its defence commitment to the Philippines, making the South China Sea dispute an important dimension of the broader strategic competition between the two powers.

Although a code of conduct could provide mechanisms for communication and managing maritime disputes, analysts caution that an agreement alone may not prevent aggressive behaviour or resolve the underlying territorial claims.