By Manuel Mogato and Praveen Menon
KUALA LUMPUR (Reuters) - Southeast Asian leaders edged closer to open criticism of China's land reclamation in the disputed South China Sea at a regional summit on Monday, as the Philippines drew the ire of Beijing which called its objections to the work "unreasonable".
The Association of Southeast Asian Nations (ASEAN) Summit in Kuala Lumpur, which was supposed to showcase the 10-member bloc's progress towards economic integration, was overshadowed by the long-running maritime territorial dispute.
ASEAN's renowned "consensus" approach has been tested over the South China Sea, with several members including host Malaysia reluctant to antagonise China, but diplomatic sources said Kuala Lumpur would eventually give in to pressure from some neighbours and address the reclamation issue at the meeting.
A statement to be issued after the closing ceremony later on Monday will say that reclamations have "eroded trust and confidence and may undermine peace, security and stability in the South China Sea", according to a draft seen by Reuters.
"We reaffirmed the importance of maintaining peace, stability, security and freedom of navigation in and over-flight over the South China Sea," it will say.
The draft seen by Reuters does not refer specifically to China, but would nonetheless be ASEAN's strongest response yet on the controversial reclamations in the disputed waters.
In 2012, host Cambodia's refusal to be drawn on China's actions in the South China Sea resulted in the customary end-of-summit communique not being issued for the first time in the bloc's 45-year history.
Diplomatic sources told Reuters that apart from Philippines, which has been the loudest critic of China, concerns were also raised privately by Vietnam and Indonesia.
"THREAT TO SECURITY"
In a speech to ASEAN heads on state on Monday, Philippine president Benigno Aquino said the "massive reclamations" by China posed a threat to the security and stability of the region.
China responded by saying the criticisms were totally unreasonable.
"China's building on islands in the South China Sea is completely within the scope of China's sovereignty; it is reasonable, fair and lawful. It does not affect any other country," foreign ministry spokesman Hong Lei said.
China claims 90 percent of the South China Sea, which is believed to be rich in oil and gas, with overlapping claims from Brunei, Malaysia, the Philippines, Vietnam and Taiwan.
Recent satellite images show China has made rapid progress in building an airstrip suitable for military use in the Spratly Islands and may be planning another.
While many of the claimants have built facilities such as airstrips on some of the islets and shoals they occupy, China's efforts have been by far the most extensive and dramatic.
Disputes over how to address an increasingly assertive role of China - an ally of several ASEAN states - in the strategic waters of the South China Sea has placed the issue squarely as Southeast Asia's biggest potential military flashpoint.
Malaysia, which has close economic ties with China, has traditionally downplayed tensions. An earlier draft statement dated April 16 made no mention of the reclamations.
Malaysian Prime Minister Najib Razak said at a press conference that he hoped ASEAN could resolve issues with China in a constructive manner.
"We hope to be able to influence China that it's also to their interest not to be seen as confronting ASEAN and that any attempt to destabilize this region would not benefit China either," he said.