* Latest draft includes reference to militarization, reclamations
* Chinese officials lobbying Manila to influence wording - sources
* China, ASEAN aiming for SCS "Code of Conduct" framework this yr
MANILA - Southeast Asian countries have altered a statement to be issued at Saturday's ASEAN summit to include references to militarization and island-building in the South China Sea, the latest draft shows, in a move likely to frustrate Beijing.
Chinese embassy representatives in Manila had sought to influence the content of the communique by lobbying Philippine officials, two ASEAN diplomatic sources told Reuters.
However, four ASEAN member states disagreed with omitting "land reclamation and militarization" - terms included in the statement issued last year in Laos, but not included in an earlier draft of this year's statement seen on Wednesday.
China is not a member of the Association of South East Asian Nations, and is not officially attending this week's summit. China embassy officials in Manila could not be reached for comment.
ASEAN references to the South China Sea issue typically do not name China. Beijing is extremely sensitive to anything that can be deemed a veiled reference to its expansion of its seven manmade islands in the Spratly archipelago, including with hangers, runways, radars and missiles.
This year's summit comes at a time of uncertainty about U.S. interests in the region and whether it will maintain a presence to counter China's assertiveness.
The final version of the statement has yet to be agreed, but the changes so far indicate ASEAN is resisting moves by China to keep its contentious activities in the strategic waterway off ASEAN's official agenda.
The latest draft suggests Beijing's burgeoning friendship with Philippine President Rodrigo Duterte, who chairs Saturday's meetings, may not have been enough to influence Manila's position either, the diplomats said.
Chinese officials were pressing for any phrase that could be interpreted as alluding to last year's ruling by the Permanent Court of Arbitration to be kept out of the statement, the diplomats said, particularly the term "full respect for legal and diplomatic processes".
The latest draft still includes that, although it was moved out of the South China Sea section to one under "ASEAN Community Vision".
The Hague ruling, in a case brought by the Philippines in 2013, angered China because it invalidated the "nine dash line" it uses on its maps to denote its sovereignty claim over almost the entire South China Sea. China refuses to recognize the decision.
As part of his engagement with China, Duterte has said he will not press it to abide by the arbitration award anytime soon. On Thursday he said it was pointless for ASEAN to pressure China over its maritime activities.
The Philippines irked China two months ago when its then foreign minister, Perfecto Yasay, said he and ASEAN counterparts had noticed "very unsettlingly" that weapons systems had been installed, and considered that "a militarization of the region".
ASEAN and China are hoping to this year agree on a framework to create a code of conduct over the South China Sea, 15 years after committing to draft it. Some ASEAN diplomats have expressed concerns about whether China is being sincere, or whether ASEAN has the enough leverage to get Beijing to commit to a set of rules.
In unusually direct comments for an ASEAN Secretary General, Le Luong Minh in an interview with Reuters on Thursday said the code needed to be legally binding to put a stop to "unilateral actions", because a previous commitment to play fair had been ignored.
(Writing by Martin Petty; Editing by Lincoln Feast)