
President Obama has warned China to give up its claim to the resource-rich South China sea during his historic visit to Laos.

He said an international arbitration ruling on July 12 against China was 'binding' and 'helped to clarify maritime rights in the region'.

The dispute has raised fears of military confrontation between the powers, with China claiming the verdict had no legal basis - and dismissing it as 'waste paper'.

Speaking at a summit of South-East Asian leaders, Obama said: 'I recognize this raises tensions but I also look forward to discussing how we can constructively move forward together to lower tensions and promote diplomacy and stability.'

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Vietnam Prime Minister Nguyen Xuan Phuc, President Obama and Laos' Prime Minister Thongloun Sisoulith link hands

The president shares a toast with India's Prime Minister Narendra Modi at the ASEAN Summit gala dinner in Laos

Obama smilies as he greets Myanmar's Foreign Minister Aung San Suu Kyi during the summit in Laos

China claims almost all of the South China Sea, including reefs and islands, based on a vaguely defined 'nine-dash-line' found on Chinese maps from the 1940s.

It has also caused dismay in the region by building artificial islands and restricting access.

Vietnam, the Philippines, Taiwan, Malaysia and Brunei all have conflicting claims over territory in the region.

The verdict by an international tribunal in The Hague said China's claims to most of the waters - through which $5 trillion in global shipping trade passes annually - had no legal basis.

Making the first trip to Laos as a sitting president, Obama met leaders from South-East Asian nations

Obama put the dispute in the South China Sea front and center on the agenda at a regional summit as it became clear most of the other leaders gathered in the Laotian capital were going to let China off with a mild rebuke over its territorial expansion

Singapore's Prime Minister Lee Hsien Loong, US President Barack Obama, Vietnam's Prime Minister Nguyen Xuan Phuc, and Laos Prime Minister Thongloun Sisoulith congregate at the summit meeting

India's Prime Minister Narendra Modi, left, and Obama shake hands during their meeting in Laos today

Despite the US's objections, the summit is expected to let China off with a muted reprimand over its expansionist activities, according to a draft of their joint statement.

It said the ASEAN (Association of South-East Asian Nations) and its partners 'reaffirmed the importance of maintaining peace, stability and security and freedom of navigation in and over-flight in the South China Sea.'

'Several Leaders remained seriously concerned over recent developments in the South China Sea... we stressed the importance for the parties concerned to resolve their disputes by peaceful means, in accordance with universally recognized principles of international laws,' it said.

The use of the phrase 'some leaders' shows how not all its members are willing to scold Beijing.

Cambodia largely remains in China's camp, as does Laos, preventing any robust statement from the consensus-bound ASEAN group.

Obama said an international arbitration ruling on July 12 against China was 'binding' and 'helped to clarify maritime rights in the region'

The US has repeatedly expressed concern over Beijing's actions in the resource-rich sea

Obama said the US will stand with allies and partners in upholding freedom of navigation and flights in international spaces

Obama wrapped up his last trip in Southeast Asia as president by describing it as an opportunity to deepen connections with the world's fastest-growing region and he hopes his successor will sustain America's engagement

Speaking at a news conference, Obama also said Republican nominee Donald Trump isn't qualified to be president and that 'every time he speaks, that opinion is confirmed.'

The president said Trump's ideas are often 'contradictory' and 'outright wacky'.

He also said he was not ready to concede that Guantanamo Bay will remain open when he leaves office.

He said aides are 'working diligently' to shrink the prisoner population, which currently stands at about 60.

Obama set a goal early in his presidency of closing the prison, but has been blocked by Congress.

This combination of photos provided by the Philippine Government shows what it claims are surveillance pictures of Chinese coast guard ships and barges at the Scarborough Shoal in the South China Sea

Elsewhere, Obama and Rodrigo Duterte had a brief face-to-face encounter, days after the 'colorful' Philippine leader referred to the president as a 'son of a bitch'.

Following the controversial comments Obama cancelled planned talks with the firebrand leader.

Wednesday's informal meeting took place at a gala dinner.

A White House official said the pair exchanged 'pleasantries' in a 'brief discussion' before the meal.