China's Premier Wen Jiabao (R) sits alongside US President Barack Obama (2nd R) and Japan's Prime Minister Yoshihiko Noda during the East Asia Summit plenary session in Phnom Penh. Picture: REUTERS
China's Premier Wen Jiabao (R) sits alongside US President Barack Obama (2nd R) and Japan's Prime Minister Yoshihiko Noda during the East Asia Summit plenary session in Phnom Penh. Picture: REUTERS

PHNOM PENH — In his first meeting with a Chinese leader since his re-election, US President Barack Obama said on Tuesday that Washington and its chief economic rival must work together to "establish clear rules of the road" for trade and investment.

His comments on the final leg of a three-day Southeast Asian trip follow a US election campaign in which China was repeatedly accused of unfair trade practices, and illustrate the work that lies ahead in a region already simmering with tension over territorial disputes involving Beijing.

"It is very important, as two of the largest economies in the world, that we work to establish clear rules of the road internationally for trade and investment," Mr Obama told Chinese Premier Wen Jiabao before an East Asia Summit of Asia-Pacific leaders in the Cambodian capital Phnom Penh.

Divisions over Chinese sovereignty claims in the South China Sea marred a Southeast Asian leaders’ summit on Monday and roiled a July meeting of the Association of Southeast Asian Nations (ASEAN) where foreign ministers failed to agree on a communiqué for the first time.

"I’m committed to working with China and I’m committed to working with Asia," Mr Obama said.

China and the US had a "special responsibility" to lead the way on sustained global growth, he said before the meeting was closed to media.

Mr Wen highlighted "the differences and disagreements between us" but said these could be resolved through trade and investment.

Mr Obama’s visit to Cambodia, the first by a US president, underlines an expansion of US military and economic interests in Asia under last year’s so-called "pivot" from conflicts in the Middle East and Afghanistan.

The Philippines, Australia and other parts of the region have seen a resurgence of US warships, aircraft and personnel since Mr Obama began shifting foreign, economic and security policy towards Asia late last year.

Japanese Prime Minister Yoshihiko Noda said mounting Asian security problems raised the importance of the US-Japan alliance, a veiled reference to tension over Chinese sovereignty claims and maritime disputes.

"With the increasing severity of the security environment in East Asia, the importance of the Japan-US alliance is increasing," Mr Noda told Mr Obama.

Strained ties

China’s claims of sovereignty over the South China Sea set it directly against Vietnam and the Philippines in one of Asia’s most divisive and vexing security problems. Brunei, Taiwan and Malaysia also lay claim to parts of the sea.

Sino-Japanese relations are also under strain after the Japanese government bought disputed islands known as Senkaku in Japan and Diaoyu in China from a private Japanese owner in September, triggering violent protests and calls for boycotts of Japanese products across China.

China says both disputes involve sea lanes that are vital for its economy and it prefers to address conflicts through one-on-one talks. But the subject is expected to feature later on Tuesday at the East Asia Summit, which also includes leaders from ASEAN, India, South Korea, Australia and New Zealand.

ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

ASEAN secretary-general Surin Pitsuwan insisted Southeast Asia remained united, even as US ally the Philippines objected to Cambodia’s statement on Monday that ASEAN agreed not to "internationalise" the maritime dispute — diplomatic code for saying it would resolve the issue without US involvement.

"We’re not going to allow the issue to cloud or to affect other pursuits that we’re doing together here," Mr Surin told reporters.

Questions over consensus

On Monday, Mr Noda challenged efforts by summit host Cambodia, a staunch China ally, to limit discussions on the mineral-rich sea. Cambodia’s claim that Southeast Asian leaders had agreed not to internationalise the South China Sea row was strongly disputed by Philippines President Benigno Aquino.

"How can there be a consensus? A consensus means 100%," Philippines Foreign Minister Albert del Rosario said. "It was translated into a consensus without our consent."

Mr Aquino raised the possibility of finding an "alternative route" to discuss the issue with countries outside the 10-member ASEAN. That would likely involve the US, one of its closest allies, which has said it has a national interest in freedom of navigation through the South China Sea.

ASEAN agreed on Sunday to formally ask China to start talks on a code of conduct aimed at easing the risk of naval flashpoints, according to Mr Surin. But Mr Wen played down the need for urgent action in talks on Sunday night with Cambodian Prime Minister Hun Sen.

Late on Monday, Mr Obama and Southeast Asian leaders launched a trade initiative known as the US-ASEAN Expanded Economic Engagement, which is aimed at smoothing a path for Asian nations to link up with the Trans-Pacific Partnership, a pact the US is negotiating with 10 Asian countries and the Western Hemisphere, the White House said.

The Trans-Pacific Partnership excludes Chinese participation until it undertakes significant economic reforms.