U.S. Secretary of State Hillary Rodham Clinton arrives for the 17th ASEAN Regional Forum (ARF) Retreat meeting in Hanoi July 23, 2010.
U.S. Secretary of State Hillary Rodham Clinton arrives for the 17th ASEAN Regional Forum (ARF) Retreat meeting in Hanoi July 23, 2010. Clinton is in the Vietnamese capital to attend the ASEAN Regional Forum on security.

Asian nations hold talks on Friday to try and defuse two critical points of tension in the Pacific, in preliminary steps welcomed by the Obama administration -- which China says is attempting to reassert its influence in the region.

During the Southeast Asian regional security conference in Bali, Indonesia, China and its neighbours reached a draft agreement aiming at the peaceful resolution of the South Sea dispute, in which competing territorial claims has created tensions within the group.

Following the meeting, both North and South Korea have agreed to resume talks.

The U.S. was quick to comment on the new developments with Secretary of State Hillary Clinton commending Beijing and the Association of Southeast Asian Nations (ASEAN) for the deal.

Clinton however also expressed cautious hope that discussion between Seoul and Pyongyang could help prelaunch stalled nuclear disarmament negotiations with the North.

"I want to commend China and ASEAN for working so closely together to include implementation guidelines for the declaration of conduct in the South China Sea," Clinton told Chinese Foreign Minister Yang Jiechi at the meeting.

Yang said he believed the agreement would go "a long way" in promoting "peace and stability" in the resource-rich South China Sea, through which one-third of the world's shipping passes. "This will of course provide favourable conditions for the proper handling and settlement of disputes among claimants," he said.

China, which claims sovereignty over the entire South China Sea, has disputed the oil exploration by the Philippines and Vietnam in waters over which the country also claim partial sovereignty over. The disputed strategic territory dispute also involve Taiwan, Brunei and Malaysia.

Last year, Clinton angered Beijing by saying resolution to the disputes was a U.S. national security interest because of Washington's desire to guarantee navigational safety and maritime security in the South China Sea. She made the matter a central point of her participation in the East Asia Summit hosted by Vietnam, something that U.S. President Barack Obama is expected to restate when he attends that event this year.

U.S. officials are keen to see the deal implemented but remain cautious as they say much more work still need to be done.

Implying U.S involvement in the dispute resolution process, Clinton said she would lay out U.S. ideas for making it work in a speech to the forum on Saturday. "It's an important first step," Kurt Campbell, the top U.S. diplomat for Asia, told reporters. "It has lowered tensions. It has improved the atmosphere. But clearly it is just that, a first step, and we're going to need to see some follow-up actions between China and ASEAN."

Despite tensions among the U.S and China reaching a new high last week, after President Obama met the Dalai Lama, The Clinton-Yang meeting appeared friendly.

While the matter was not publicly mentioned, a Chinese spokesman however revealed that that Yang had raised the importance of respecting China's "sovereignty and territorial integrity," including Tibet.

Hinting that things between the two giant are still tensed however, Chinese Foreign Minister Yang Jiechi told the Clinton that the U.S should respect Chinese "territorial integrity, according to a Chinese delegation official.

"The Chinese side raised its own concerns, which is that it is important to respect the sovereignty and territorial integrity of China," spokesman Liu Weiming said.

"And to respect China's major concerns in the issues of Tibet and some other sensitive issues. I sense that the US side understands the sensitivity of these issues and they agreed to further promote dialogue and mutual understanding."Weiming added.