China and Southeast Asian countries have made progress in negotiations on a proposed South China Sea agreement but will not be able to finalise it this year as previously agreed, three regional diplomats said Wednesday.

China and the Association of Southeast Asian Nations (ASEAN) began talks on the proposed "code of conduct" in 2005 to prevent occasional confrontations in the disputed waters from escalating into a major conflict that could threaten regional economies.

The proposed agreement primarily seeks to ensure restraint among the parties and discourage aggressive actions that could trigger clashes in the strategically important waterway, a major global trade route.

After years of negotiations behind closed doors, which were sometimes delayed by tensions and confrontations in the disputed waters, China and ASEAN agreed in 2023 to accelerate the process and complete the talks by the end of this year.

However, following the final round of negotiations for the year last month, the two sides have provisionally agreed on around 80 percent of the paragraphs to be included in the proposed agreement, according to three senior Southeast Asian diplomats familiar with the discussions.

The remaining major disagreements concern the geographical areas the agreement would cover, the definition of certain sensitive terms and whether the proposed code should be legally binding, the diplomats told The Associated Press.

They spoke on condition of anonymity, saying they were not authorised to discuss the negotiations publicly, and did not provide further details.

The negotiations are expected to continue next year when Singapore takes over the rotating chairmanship of ASEAN.

The Philippines, which holds the bloc's chairmanship this year, increased the frequency of meetings to at least once a month, giving negotiators more opportunities to address outstanding issues, the diplomats said.

China and Malaysia, which currently oversees ASEAN's overall relations with Beijing, jointly led at least 10 major rounds of negotiations this year.

The progress of the proposed agreement and continuing incidents in the South China Sea are expected to feature prominently on the agenda of the ASEAN leaders' annual summit, which begins in Manila this weekend.

Following their meeting, the regional leaders will hold discussions with leaders from Asian and Western countries, including the United States and China.

China and four ASEAN members — Brunei, Malaysia, the Philippines and Vietnam — as well as Taiwan have been involved in long-standing territorial disputes in the strategically important waterway, which is also believed to contain significant undersea oil and gas reserves.

Tensions have intensified in recent years, particularly between Chinese and Philippine coast guard and naval forces operating around disputed shoals.

In 1988, a confrontation between Chinese and Vietnamese forces over a disputed reef killed dozens of Vietnamese military personnel, marking one of the deadliest known clashes in the South China Sea.

Julio Amador III, a Manila-based geopolitical analyst, said the proposed code of conduct alone might not be enough to prevent aggressive actions in the disputed waters. However, he said combining it with diplomatic initiatives and stronger military capabilities could make potential aggressors reconsider their actions.

"Restraining great powers takes a lot of effort," Amador said, referring to China.

"We cannot be a one-trick pony as a country. You need to have all the tools, whether it's a code of conduct, whether you bring a case against China or whether you increase your military spending," he added.

The disputed waters have long been considered a potential flashpoint in Asia and have emerged as a sensitive area of rivalry between the United States and China.

Washington has repeatedly said it is committed to defending the Philippines, its oldest treaty ally in Asia, if Filipino forces come under armed attack, including in the South China Sea.

China, meanwhile, has warned the United States against getting involved in what it describes as a dispute that should be resolved by Asian countries.