UPDATE 1-Pompeo tells SE Asia to stand up to China, shun its firms

* Don't let China 'walk over us', Pompeo tells SE Asian
nations
* China says militarisation driven by U.S.
* Australia supports Indo-Pacific 'free from coercion'

(Updates with joint statement from ASEAN member states)
By Phuong Nguyen
HANOI, Sept 10 (Reuters) - The United States' top diplomat
on Thursday urged Southeast Asian countries to stand up to
maritime bullying by China and to reassess business deals with
its state firms, adding to heated exchanges between two powers
jostling for influence.
Speaking remotely to foreign ministers of the 10-member
Association of South East Asian Nations (ASEAN), Secretary of
State Mike Pompeo said the region should be confident in the
United States and know it can bank on its support.
"Today, I say keep going. Don't just speak up but act,"
Pompeo said. "Reconsider business dealings with the very
state-owned enterprises that bully ASEAN coastal states in the
South China Sea. Don't let the Chinese Communist Party walk over
us and our people."
ASEAN has said it does not want to take sides amid friction
over a recent spike in military activities by both powers in the
South China Sea and ahead of a November election in which U.S.
President Donald Trump will trumpet his tough stand against
China.
Asked about China-U.S. tensions on Tuesday in an interview
with Reuters, Indonesian Foreign Minister Retno Marsudi said:
"We don't want to get trapped by this rivalry." China's State Councillor Wang Yi on Wednesday told the ASEAN
ministers that the United States was interfering in the South
China Sea and was driving its militarisation. China says it has historical sovereignty over most of the
waterway, but its neighbours and the United States say that
claim has no basis in international law, including the 1982
United Nations Convention on the Law of the Sea (UNCLOS), to
which China is a signatory.
In a joint statement released late on Thursday, ASEAN member
states said progress had been made in negotiations to draft a
code of conduct in the South China Sea that was consistent with
international law, including UNCLOS.
"Concerns were expressed by some Ministers on the land
reclamations, activities, and serious incidents in the area,
which have eroded trust and confidence, increased tensions, and
may undermine peace, security, and stability in the region," the
statement said.
Pompeo's swipe at Chinese firms follows Washington's recent
announcement of sanctions on 24 Chinese entities involved in
building artificial islands in disputed waters and installing
missile systems on them. U.S. ally the Philippines is among countries where
blacklisted firms have secured lucrative contracts. Its
president says those will go ahead. ASEAN ministers also held remote meetings on Thursday with
Japan and Australia.
Foreign Minister Marise Payne said Australia was committed
to a peaceful Indo-Pacific "free from coercion and with
sovereignty, international law and the rights of all states
respected and upheld."
Vietnam Foreign Minister Pham Binh Minh in a statement
welcomed the U.S. role in supporting ASEAN's hope for peace,
stability, security and freedom of navigation.