By Roberta Rampton and Martin Petty
VIENTIANE (Reuters) - Barack Obama defended his efforts to 'rebalance' U.S. foreign policy toward Asia on Thursday even as he wound up the final visit of his presidency to the region with the South China Sea dispute still smoldering.
Obama's trip to Asia began and ended on awkward notes.
Arriving for a G20 summit in China last week, his staff argued with airport security officials over media access, and a meeting in Laos with the Philippines' new president was called off after he alluded to Obama as "a son of a bitch".
Obama, who lived in Indonesia as a boy with his mother, a development worker, told a group of young leaders that the emphasis he had placed on Asia over his two terms was personal.
But addressing leaders of Southeast Asian nations in Laos on Thursday, he said it was also "key to a peaceful and prosperous future for the world", and voiced his hope that whoever succeeds him in the White House next year would take it forward.
Obama, whose foreign policy focus has been widely seen as a response to China's economic and military muscle-flexing across the region, said critics at home were wrong to say it had failed when Asian leaders only wanted more.
"The concern that I've heard is - will it continue? And, almost uniformly, the questions I get from other leaders is: we hope that America's interest, and presence, and engagement is sustained," he told a news conference in Vientiane, the capital of Laos.
Nevertheless, there was barely concealed tension at the summit of East Asian and Southeast Asian nations in Laos.
CHINA DENOUNCES "INTERFERENCE"
The leaders played down differences over the South China Sea in a carefully worded statement, mentioning only that several of them were "seriously concerned over recent developments" in the waterway that is the most volatile hotspot in the region.
China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei have competing claims on the sea, through which more than $5 trillion of trade moves annually. The last four are part of the 10-member Association of Southeast Asian Nations (ASEAN).
The statement made no reference to a July ruling by a court in The Hague that declared illegal some of China's artificial islands and invalidated its claims to almost the entire sea.
But Obama pointedly told the meeting that the arbitration ruling, which China refuses to recognize, was "binding".
"We discussed the importance of claimants adhering to steps they've already agreed including respecting international law, not militarizing disputed areas and not occupying uninhabited islands, reefs and shoals," he told reporters later.
For its part, Beijing voiced objections several times to what it referred to as countries outside the region "interfering" in tussles over the South China Sea - wording that is usually understood to mean the United States and Japan.
Vice Foreign Minister Liu Zhenmin told reporters in Laos it had been "inappropriate" for two countries, which he did not name, to bring up the arbitration issue during the summit.
Besides the ASEAN members, China, Japan, South Korea, Russia, India, Australia, New Zealand and the United States attended.
China has over the past year alarmed other claimants, and outside powers such as the United States and Japan, by re-claiming land on several disputed reefs through dredging, and building air fields and port facilities.
The Philippines, a longtime ally of the United States, pumped up tension over the South China Sea on Wednesday ahead of a meeting between Chinese Premier Li Keqiang and ASEAN leaders.
It released photographs and a map showing what it said was an increased number of Chinese vessels near the disputed Scarborough Shoal, which China seized after a standoff in 2012.
Its defense ministry expressed "grave concern" that China was preparing to build structures at the shoal.
China's embassy in Manila said there has been no dredging or building at the shoal and China has maintained a coastguard presence there for law enforcement patrols.
SPAT WITH MANILA OVER SLUR
The Philippines' move came after a dispute with the United States, its former colonial power. Ties turned frosty when new President Rodrigo Duterte insulted Obama on Monday, prompting the cancellation of a meeting between them.
Duterte has bristled at criticism from abroad of his war on drugs, in which more than 2,400 people have been killed since he became president two months ago.
Obama and Duterte made some steps toward clearing the air late on Wednesday, chatting briefly, and exchanging pleasantries as they prepared to take their seats at a leaders' dinner.
Obama has made 11 trips to the region as U.S. president.
But they have often been overshadowed by events at home or other parts of the world, and his ambition to put a Trans-Pacific Partnership (TPP) trade pact at the heart of the "pivot" to Asia has been frustrated.
The prospects for U.S. congressional approval for the TPP have looked increasingly dim, with both major presidential candidates - Democrat Hillary Clinton and Republican Donald Trump - standing opposed.
"I have said before and I will say again failure to move ahead with TPP ... will call into question America's leadership," Obama said in Laos. "I think it is important for the entire region and it is important for the United States."
(Additional reporting by Mai Nguyen, Amy Sawitta Lefevre, Brenda Goh and Maniel Mogato, and by Ben Blanchard in Beijing; Writing by John Chalmers; Editing by Raju Gopalakrishnan)