Political Economy of Connectivity
Beyond Arbitration: Rebuilding ASEAN–China Cooperation in the South China Sea

As ASEAN and China accelerate negotiations on a long-awaited Code of Conduct for the South China Sea, the region is entering a critical phase in managing one of Asia’s most consequential security challenges. Lasting regional stability will depend less on legal confrontation than on sustained multilateral diplomacy, pragmatic compromise, and the strengthening of ASEAN-centred cooperative mechanisms, writes Ladislav Zemánek.

The South China Sea arbitration has sharpened legal positions regarding the region but has not resolved underlying geopolitical disputes. Instead, it has deepened strategic mistrust and complicated the cooperative regional order that ASEAN has sought to build with China for decades. Against this backdrop, the Philippines’ commemoration of the 10th anniversary of the arbitration and its efforts to reinforce the ruling run counter to the broader regional desire for stability and development, and do not align with ASEAN’s prevailing emphasis on dialogue, consensus, and pragmatic cooperation.

The 2016 South China Sea arbitration between the Philippines and China produced a sweeping legal award. However, China’s rejection of the tribunal’s jurisdiction and findings meant that in practice, the ruling neither settled sovereignty disputes nor resolved maritime delimitation. The case illustrates a broader reality of international politics: adjudication, when detached from political consent and realistic enforcement mechanisms, may sharpen legal positions without changing strategic behaviour.

A purely legalistic approach, pursued without parallel efforts to strengthen regional political frameworks, risks turning UNCLOS from a shared foundation into a contested instrument invoked selectively to justify unilateral positions. While the arbitration might have clarified some legal questions, it did little to reduce escalation risks or foster the habits of cooperation required for a stable maritime order. A more constructive path lies in re-centring regional diplomacy on multilateral consultation, pragmatic compromise, and adherence to agreed norms such as UNCLOS, the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC), and the emerging Code of Conduct (COC).

ASEAN’s Cooperative Approach

Since the mid-1990s, ASEAN has sought to manage the South China Sea within a broader architecture of dialogue, restraint, and confidence-building with China. The DOC reaffirmed core principles, including the peaceful settlement of disputes, freedom of navigation and overflight, self-restraint, and practical cooperation in areas such as marine environmental protection and search and rescue. It also committed the parties to negotiating a future Code of Conduct by consensus.

The arbitration sat uneasily alongside this cooperative trajectory as it exposed differing strategic priorities within ASEAN. Southeast Asian countries vary considerably in their threat perceptions, economic dependence on China, and security partnerships. Consequently, a confrontational legal strategy championed by some members could complicate ASEAN’s ability to maintain the collective diplomatic front on which its regional centrality depends.

The award has also been employed by extra-regional powers to justify freedom of navigation operations and a larger strategic presence in the region, often framing the dispute as a binary contest between the rule of law and revisionism. While defending international law is essential, such framing can narrow the diplomatic space available to Southeast Asian states, whose foreign policies traditionally rely on hedging, multi-alignment, and pragmatic engagement with all major powers. The risk is that the South China Sea increasingly becomes a theatre for strategic rivalry rather than regional cooperation.

Territorial and maritime disputes are a recurring feature of international politics rather than historical anomalies. China’s own experience demonstrates this. Sino-Soviet border tensions escalated into armed clashes before Beijing and Moscow eventually reached negotiated settlements based on pragmatic compromise, accepting territorial adjustments in exchange for strategic stability and improved bilateral relations.

This experience underlines that borders are political constructs capable of clarification, adjustment, or joint management through negotiation. What matters is not the absence of disputes but the procedures used to manage them peacefully and consistently with international law. Southeast Asia itself offers similar examples, where states have gradually resolved land and maritime boundaries despite colonial legacies and overlapping historical claims.

Viewed from this perspective, the South China Sea disputes should be understood as complex but normal political negotiations over territory and resources rather than inherently exceptional or morally absolute contests.

Why Stability Matters

The geopolitical importance of the South China Sea magnifies the consequences of mismanaging these disputes. The region contains some of the world’s busiest shipping lanes, carrying substantial volumes of global trade, energy supplies, and raw materials between East Asia, South Asia, the Middle East, and Europe. Any disruption would reverberate across international supply chains and affect global economic growth.

This interdependence gives both regional and extra-regional actors a strong interest in preserving stability. At the same time, it encourages outside powers to play a more active strategic role, complicating regional diplomacy. For ASEAN, preserving ownership of the normative and institutional framework governing the South China Sea remains essential if regional priorities are not to be displaced by major-power competition.

The diversity of ASEAN’s responses reflects structural realities rather than institutional weakness. Frontline claimants such as the Philippines naturally face different security calculations from non-claimant members, many of which prioritise economic ties with China, regional connectivity, or domestic stability.

Political alignments further complicate consensus. Some ASEAN members maintain close defence ties with the United States, while others cooperate more closely with China, and many deliberately pursue multi-alignment. In this environment, presenting arbitration as the defining test of commitment to international law can be interpreted as implicitly aligning ASEAN with one strategic camp, thereby weakening the organisation’s cohesion and its long-standing principle of centrality.

A More Durable Path Forward

A more sustainable approach necessitates that respect for international law be combined with recognition of political realities and asymmetric power relationships.

First, UNCLOS should be presented not as a legal weapon against particular states but as a shared framework for practical cooperation, including joint resource development, fisheries management, environmental protection, and incident prevention. The DOC already provides a foundation for such cooperation, which the future Code of Conduct should strengthen.

Second, ASEAN and China should accelerate negotiations on a substantive Code of Conduct. At the 2026 ASEAN Foreign Ministers’ Meeting in Cebu, both sides reaffirmed their ambition to conclude negotiations within the year and intensified technical discussions. The Code’s credibility, however, will depend on moving beyond broad principles towards operational provisions governing incident management, transparency, and crisis communication.

Third, diplomatic commitments must increasingly be reflected in behaviour at sea. Institutionalised rules of engagement, notification procedures, expanded coast guard cooperation, operational hotlines, and joint training would reduce the risk of miscalculation while reinforcing confidence in multilateral commitments.

Finally, the geopolitical framing of the disputes should prioritise pragmatism over moralisation. ASEAN claimants and China should continue exploring arrangements that separate sovereignty disputes from resource development, allowing practical cooperation even where legal claims remain unresolved. Such interim arrangements acknowledge that territorial disputes can be managed over time without requiring immediate resolution of every sovereignty question.

Reinforcing Multilateralism and Confidence-Building

The South China Sea disputes demonstrate that law, power, and diplomacy interact rather than operate independently. The 2016 arbitration addressed legal issues but did not fundamentally alter the strategic calculations of the principal actors. Its forceful promotion also risked widening divisions within ASEAN and intensifying major-power rivalry.

A more promising course lies in reinforcing ASEAN-centred multilateralism. Territorial disputes should be treated as manageable political questions addressed through negotiation, confidence-building, and practical cooperation rather than as zero-sum contests. Historical experience, the economic centrality of the South China Sea, and ASEAN’s own evolution all suggest that pragmatic compromise offers a more durable foundation for regional stability than legal confrontation alone.

Ultimately, the durability of any regional order will depend less on arbitral awards than on the willingness of all parties to align their conduct with the shared norms they have endorsed and to recognise stability in the South China Sea as a common strategic interest rather than an arena for geopolitical competition.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.