At the 31st ASEAN summit in Manila last year, China and ASEAN countries agreed to begin negotiating a "code of conduct" for the South China Sea (SCS) in March 2018. Frequent tensions over natural resources, trade routes and island territories pose a threat to regional stability. Observers were cautiously optimistic that a new round of negotiations would take place, but this latest opportunity has passed without action from the conflicting parties.

DW: What is the current situation in the South China Sea?

Bill Hayton: The status quo in the South China Sea (SCS) at the moment is looking fairly stable. You have a series of islands and reefs and rocks that are occupied, but no one is trying to push anybody else off these islands directly.

The conflict is really taking place where there might be oil or gas reserves. In effect, China is trying to dominate areas where there are claims from Southeast Asian countries. China is trying to prevent those countries from exploiting those areas and prevent drill oil and gas drilling and control fisheries.

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China has built these very large island bases in the Spratly Islands, and from there it can project power with ships and helicopters and potentially planes to actually control the sea areas.

But at the moment as far as we know, we're not yet seeing physical clashes but rather a kind of increasing domination by China just in terms of presence.

If the situation is more or less stable, why is there a need for a code of conduct?

I think Southeast Asian countries see that China is playing a very long game. The effort for a code of conduct started in 1995.

So 22 years ago, when China occupied Mischief Reef close to the Philippines, it started as a series of bamboo huts on stilts and is now an artificial island with a runway that is 3 kilometers long and massive buildings and radar towers.

I think the fear from the Southeast Asians is that this is not going to stop, and China is intent on trying to occupy every single feature in the South China Sea and to dominate all resources.

They want to try and put limits on China to get them to agree to accept the status quo and that there will be no further advances. The problem of course is that China does not wish to limit its own behavior.

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What would a code of conduct look like?

Southeast Asians want to control China's behavior. They don't want to occupy anybody else's islands, but they do fear that China is going to continue advancing.

All sides need to be confident that island occupations will stop. There are a few locations that have not been built on or physically occupied by claimant states. Scarborough Shoal off the Philippines is a well-known example. There is suspicion that China wants to build a large military base there, which would allow it to dominate the eastern side of the SCS.

Another aspect is applying the United Nations Convention on the Law of the Sea (UNCLOS) all over the SCS. Southeast Asian states would have the right to exploit the oil and gas and fish resources off their coasts. Unfortunately, China was opposed to both of these things.

How can confidence be built?

Things that could be done such as drawing lines and agreeing to cooperation in those areas. We could take the Spratly Islands and have cooperative measures to preserve endangered fish stocks. Oil and gas rights are harder to resolve because only one country can exploit it and then it's gone.

What could be an incentive for China to restrain its power?

There could be a grand strategy when you invoke the United States and possibly Japan and say: we will leave you alone in this part of the world if you respect the rules, and if you don't, we won't leave you alone.

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The Trump administration seemed to suggest this in terms of their relations with China and would pressure China unless it agreed to respect the status quo in the SCS.

I don't know if these discussions actually happened but that seems that the Trump administration making these hints.

If China were to resolve its disputes with Southeast Asian claimants, that would remove a reason for the US to be there. If there was no reason for the US to respond to the threat to freedom of navigation or the rules-based order, maybe it would reduce its presence and that might make the Chinese feel more secure.

The question is if China can see that recognizing long-term rules they've signed on to would actually make everybody relax. It would make people think that China was going to play fair and that it was not a threat.

In the long term, I think this would be a good thing for China. But China or the Chinese leadership doesn't seem to see it that way.

The Chinese leadership thinks, basically, 'This is ours and nobody should take it away from us, and by compromising in effect we are giving up our territory.' They see it very much in territorial terms. And that's the problem.

Bill Hayton is an Asia expert at the British think tank Chatham House. In 2014 he published the well-received book "The South China Sea."

The interview was conducted by Rodion Ebbighausen.