For more than two decades, ASEAN and China have been negotiating a set of rules for the South China Sea. In 2023 the two sides adopted guidelines promising to finish the job within three years, putting the deadline in July 2026. That date has passed without a document. The Philippines, this year’s ASEAN chair, is now aiming for conclusion by the end of 2026, with the 49th ASEAN Summit in Metro Manila on 10 to 12 November the obvious moment to announce something.

Negotiators have raised the tempo. Talks that once ran quarterly now run monthly, and the parties have narrowed their disagreements to four milestone issues: the geographic scope of the Code, whether it will be legally binding, how it relates to the 2002 Declaration on the Conduct of Parties, and the terms of reference governing its operation.

The binding question

The second of those issues is the one that matters commercially. ASEAN member states have consistently argued that a Code of Conduct without legal force would be little more than a restatement of existing goodwill. China has never accepted that position. Until it does, any agreement signed in Manila would function as a political understanding rather than an enforceable instrument.

That distinction is not academic for anyone with assets in the water. Shipping operators, offshore energy developers and subsea cable owners currently manage South China Sea risk through insurance, routing decisions and diplomatic channels. A binding Code with dispute-resolution machinery would change that calculus. A non-binding one would not.

Scepticism from the region

Not everyone expects a signature. One regional specialist told the South China Morning Post that a 2026 conclusion was “simply not achievable”, and analysts have pointed out that the scope question alone, whether the Code covers the entire South China Sea or only disputed features, has resisted resolution for years. Indonesia, which is not a claimant but has overlapping interests in the waters off the Natuna Islands, has emerged as a central broker precisely because it can press both sides without appearing partisan.

What to watch for in November

A few markers will show whether November produces substance or a communiqué. Watch whether the published text uses obligation language or hortatory language. Watch whether the Code includes any mechanism for handling incidents at sea, as opposed to merely committing parties to avoid them. And watch whether it addresses resource development, which is where commercial exposure concentrates.

There is also a plausible middle outcome that professionals should plan for: a framework agreement announced with fanfare, containing agreed principles and a commitment to negotiate binding annexes later. That would satisfy the political need for a deliverable in the deadline year while leaving the operative questions open.

Summary

ASEAN and China have missed their July 2026 target for a South China Sea Code of Conduct but are negotiating monthly toward a possible announcement at the November summit in Manila. Four issues remain open, of which the binding-versus-non-binding question carries the most commercial weight. Businesses with maritime, energy or telecommunications exposure in the region should read any announced text closely for obligation language, incident-management provisions and treatment of resource development, and should be prepared for a framework-only outcome that defers the hard questions.