US President Obama heads back to Washington from Cambodia, after meeting leaders from southeast Asia, Australia, China, India, Japan, New Zealand, and South Korea, to discuss political and economic issues in a region now seen as the fulcrum of global economic growth.

Territorial wrangles over the South China Sea, much of which is claimed by China as well as a number of other smaller countries, dominated the summit of Asian leaders. Territorial tensions between China and Japan were also closely watched at the summit. Obama's first foreign trip after his reelection saw some surface compromise on the issues, while a new trade bloc looks set to form without the participation of the US.

With China's Wen Jiabao soon to step down as prime minister, the summit likely marked the last official meeting between Wen and Obama. And both world leaders sought to avoid a direct confrontation.

“The US and China do not appear willing to risk superpower tension at this time over the resource-rich areas around the contested islets and shoals,” says Thitinan Pongsudhirak, head of the Institute of Security and International Studies in Bangkok.

"It is very important that as two of the largest economies in the world, that we work to establish clear rules of the road internationally for trade and investment, which can increase prosperity and global growth," said Obama after meeting China's Wen.

Obama and China play nice?

With a focus on economics, the US appeared to hold a noncommittal line on security issues during the talks, though it has spoken strongly on the South China Sea in the past, citing the need for dialogue while negotiating with Vietnam and the Philippines about supplying military hardware.

Now, however, “President Obama’s message is there needs to be a reduction of the tensions,” US Deputy National Security Adviser Ben Rhodes said after Tuesday's meetings. “There is no reason to risk any potential escalation, particularly when you have two of the world’s largest economies – China and Japan – associated with some of those disputes.”

China, too, sought to be diplomatic. “We do not want to bring the disputes to an occasion like this,” Wen told the summit, according to Chinese Deputy Foreign Minister Fu Ying, who briefed media on Tuesday evening.

It seemed China’s apparent effort to have host Cambodia play bad cop, however, may have backfired: Phnom Penh was forced to backtrack on assertions that southeast Asian countries reached a “consensus” that they would not “internationalize” the South China Sea issue – seen as code for Chinese requests that nonclaimant powers such the US and Japan steer clear of the dispute. Closing the summit, Cambodia's usually voluble Prime Minister Hun Sen refused to take questions during a press conference, saying "I am exhausted after these three days."

The players

The Philippines, a US ally, said that there was no such agreement between member states of the Association of Southeast Asian Nations (ASEAN), and backed by Vietnam and Singapore, forced the final ASEAN communique on the issue to erase a section claiming a consensus.

There are seven claimants to parts of the oil-rich South China Sea and its islands: China, Indonesia, Malaysia, the Philippines, Singapore, Vietnam, and Taiwan.

Both the US and Japan raised the South China Sea issue in their meetings with ASEAN.

But, in an apparent softening of demands that ASEAN deal with China as a group on the issue, rather than see bilateral negotiations between China and claimant member-states, which is what China wants, the Philippines today proposed that “all claimants consider coming together to begin focusing on clarification of maritime claims.”

When asked by the Monitor if President Benigno Aquino's proposal meant an end to ASEAN or US involvement in the dispute, Manila's Foreign Secretary Alberto del Rosario replied, “Not necessarily.”

The Philippines and China faced-off earlier in 2012 at the Scarborough Shoal just off the Philippine coast. Both countries remain obdurate over the area, however, so overall, tensions remain.

“Huangyan Island [Scarborough Shoal] is China’s territory,” Deputy Foreign Minister Fu quoted Wen as telling the summit. “China’s act of defending its sovereignty is necessary and legitimate.”

Many others, however, see it as an overstep, and US allies seem to be hoping for a firmer line from Obama.

“Obama just talking about the sea disputes and asserting US interest in the dispute was good. But from the accounts I’m reading, he was too evenhanded,” says Walter Lohman, Asia Studies Center director at the Heritage Foundation. “You don’t have to take sides on the details of territorial disputes to attribute blame for the current problems. It's not fair, or ultimately conducive to peace, to treat everyone equally, when the one common element to all the disputes is unreasonable Chinese claims and aggressiveness,” says Mr. Lohman.

Obama's summit meetings came after visiting Thailand, a long-time US ally, as well as Myanmar, a former pariah now coming out of the cold but retaining close economic ties with China – a visit seen as both a reward for the military-dominated government's reforms as well as a step by the US in pushing back Chinese influence in the region.

More regional blocs?

In Thailand, Obama brought the government onboard the Trans-Pacific Partnership (TPP), a proposed free trade grouping taking in Australia, Brunei, Canada, Malaysia, Mexico, Peru, Singapore, and Vietnam, but one likely to be dominated by the US.

The TPP does not include China, prompting speculation that the body is part of US plans to sidestep Beijing, even though the two countries are economically-interdependent in many ways.

On Tuesday in Phnom Penh, ASEAN member-states as well as Australia, China, India, Japan, South Korea, and New Zealand said they would work to set up the world’s biggest free trade bloc by 2015, to be called the Regional Comprehensive Economic Partnership (RCEP).

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Analysts say that the RCEP initiative may have stemmed from concerns about the leverage of the TPP. “As the US becomes more aggressive with TPP, ASEAN is afraid of being dominated by the superpower on the trade front,” says Professor Thitinan.

However, some say both groups could still help promote trade relations across the region and possibly lead to a single regional trade entity in future. “There won’t be two blocs. There is too much overlap among the parties,” says Walter Lohman.