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Turnbull 'cautiously optimistic' on code

AAP logoAAP 8/09/2016 Lauren Farrow Southeast Asia Correspondent

After days of talks where tensions in the South China Sea were a hot topic, Prime Minister Malcolm Turnbull has a sense of "cautious optimism" that some agreement surrounding conduct in the hotly disputed waters can be reached.

The July decision in the Hague - which rejected China's claims to large swathes of the waters - is "a reality" Mr Turnbull said on Thursday.

But a draft statement from the Association of South East Asian Nations (ASEAN) circulating on Thursday looks set to avoid reference to it once more.

It will be the second time since the decision that ASEAN has failed to explicitly point to the decision following talks.

But Mr Turnbull said there was a sense of "cautious optimism" that an agreement could be reached over the long sought after Code of Conduct - which would govern behaviour in the waters.

Throughout his trip to Laos, Mr Turnbull has been promoting Australia as a peace maker in the region - emphasising the importance of stability and security as a basis for economic growth.

The message of "restraint" and "stability" has also been sent by other non-claimant nations, such as the US and Indonesia throughout the summit.

Mr Turnbull said China's ongoing development activities at Scarborough Shoal and other sites in the South China Sea would "no doubt be on the agenda" when he met the country's Premier Le Kequiang on Thursday.

He is also hoping to speak further with Philippine President Rodrigo Duterte on the topic before leaving Laos, saying as a newly elected leader it was "very important for us to hear what his views are (on the South China Sea) and what his perspective is firsthand."

The Prime Minister will travel Pohnpei in the Federated States of Micronesia for the Pacific Islands Forum on Thursday night where he will announce a "substantial package of assistance to Pacific Island countries to address the impacts of climate change and improve disaster risk reduction".

Maritime security and trade will also be on the agenda before he departs for Australia on Saturday.

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