U.S.-China row may take turn for worse at Asia security meet (Reuters)

NUSA DUA, Indonesia (Reuters) ? Relations between the United States and China could hit another rough patch this week at Asia's biggest security forum, where some participants will be seeking U.S. help to thwart what they see as Beijing's expansionism in the South China Sea.

Sino-U.S. ties are already being tested -- Beijing has reacted angrily to President Barack Obama's meeting with the Dalai Lama at the weekend, calling it a gross violation of its internal affairs, but stopped short of threatening retaliation.

That row comes only days before U.S. Secretary of State Hillary Clinton heads to the Indonesian resort island of Bali for the annual Association of South East Asian Nations (ASEAN) Regional Forum. The meeting will focus on disputed atolls and islands in the oil-rich South China Sea, and China's perceived muscle-flexing there.

"It could be a rough ARF," said Simon Tay, chairman of the Singapore Institute of International Affairs, referring to the forum. "The bilateral relationship has not been the best, and this will make it worse."

Both Vietnam and the Philippines have accused China of acting aggressively over the past few weeks in asserting its claims to the strategically located and potentially lucrative waters, which straddle vital shipping lanes.

Both have been looking to Washington to support their case, while China is adamant about not involving other parties to help resolve the matter.

"Chinese leaders can't be seen to be weak on this issue because of the backlash they will get within the country," said Ian Storey, a fellow at the Institute of Southeast Asian Studies in Singapore.

China, the Philippines, Malaysia, Brunei, Vietnam and Taiwan all claim parts of the South China Sea. China's claim is the largest.

ASEAN foreign ministers, who began their own meeting on Tuesday, are likely to call for a long-awaited code of conduct for all parties in the South China Sea to be finalized by the end of the year.

"Things do not necessarily have to be this slow. We need to see some progress on the South China Sea," Indonesian President Susilo Bambang Yudhoyono said while inaugurating the meeting.

"We need to send a strong signal to the world that the future of the South China Sea is a predictable, manageable and an optimistic one."

ECONOMIC LIFELINE

Although some analysts say the South China Sea dispute could lead to an armed conflict, many feel that would not be in any party's interests.

China transports as much as 80 percent of its oil imports through the South China Sea, and sends the exports on which its economy relies through the same waters, to Europe, the Middle East and Africa.

"It is clearly in no country's interest for the free flow of maritime trade through the South China Sea to be disrupted, and we are not nearly at that point yet," Storey added.

The value of China-ASEAN trade reached $171 billion in first six months of 2011, around one tenth of China's total during that period.

"China's card is its tightening economic ties with ASEAN, and it will certainly use it to emphasize the common interest between China and ASEAN, especially in view of the weak economies in the U.S. and Japan," said Joseph Cheng, a professor at City University of Hong Kong.

Also, with the U.S. economy in dire straits and China holding over $1 trillion of U.S. Treasury bonds, ties between the world's largest economy and the second-largest are in a sensitive phase.

Nevertheless, U.S. officials said Clinton will emphasize Washington's position that it has national interests at stake in ensuring that international waterways remain open to navigation and in combating threats such as piracy.

KOREA

Diplomats may also be looking for some preliminary groundwork to be done at the ARF meeting on a resumption of the six-party talks on North Korea's nuclear ambitions.

All six parties -- the two Koreas, China, Russia, Japan and the United States -- will be at the Bali meeting.

But Japan, South Korea and the United States are wary of Chinese efforts to relaunch the talks and want Pyongyang to show clear signs it is ready to change its bellicose behavior, U.S. officials said.

The United States may also discuss the question of resuming food aid to North Korea after Washington sent an assessment team to the country in May, but has not yet made a decision on resuming food assistance amid concerns over accountability and transparency.

(Additional reporting by Manny Mogato in Manila, Olivia Rondonuwu and Andrew Quinn; Editing by Daniel Magnowski)

Source: http://us.rd.yahoo.com/dailynews/rss/china/*http%3A//news.yahoo.com/s/nm/20110719/pl_nm/us_china_asean_forum

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