FirstFT: China ratchets up military drills around Taiwan

Good morning. China announced a fresh round of military manoeuvres around Taiwan yesterday in reaction to the visit of a US congressional delegation, a move that ratchets up Beijing’s efforts to isolate the island nation.

The announcement came after Democratic senator Ed Markey and four members of the US House of Representatives from both sides of the aisle landed in Taiwan on Sunday night and met President Tsai Ing-wen on Monday morning.

The Chinese defence ministry said the visit flagrantly violated previous agreements and China’s sovereignty and territorial integrity.

“[It] sends a wrong signal to the ‘Taiwan independence’ separatist forces, and fully exposes the true face of the US as a disrupter and destroyer of peace and stability in the Taiwan Strait,” the ministry said.

Beijing’s fierce reaction to the latest US delegation is raising concerns in Taiwan and elsewhere that the Chinese leadership is trying to impose a new status quo under which foreign politicians and officials are dissuaded from engaging with the island’s government.

The People’s Liberation Army’s new “multiple services joint combat-readiness patrols and exercises” come barely five days after it completed week-long drills that followed US House Speaker Nancy Pelosi’s visit to Taiwan. China said last week those drills had succeeded in “obliterating” the median line in the Taiwan Strait, an unofficial buffer zone, and that the PLA would from now on regularly patrol around the island.

Since then, PLA aircraft and warships have been conducting daily manoeuvres around Taiwan in numbers far exceeding those before Pelosi’s visit and in areas close to Taiwan where they were not frequently active before the current crisis.

According to the Taiwanese defence ministry, 96 Chinese military aircraft were active around the island between last Thursday and Sunday — after Beijing had said its exercises were over, but that it would keep a “close eye” on Taiwan and the US and conduct frequent patrols in the area.

Happy Tuesday, and thanks for reading FirstFT Asia. —Ethan

Five more stories in the news

1. Iran denies links to Salman Rushdie attack Nasser Kanaani, Iran’s foreign ministry spokesman, said on Monday that the Islamic republic “definitely and seriously” had no links to the suspect. In 1989, Iran’s then supreme leader Ayatollah Ruhollah Khomeini issued a fatwa on the author, authorising Muslims to kill Rushdie for his alleged blasphemy.

2. Rio Tinto rebuffed in plan to take control of Mongolia copper project Turquoise Hill Resources said Rio’s cash offer did not “fully and fairly reflect” the value of its holding in Oyu Tolgoi. Once an underground expansion project is completed, Oyu Tolgoi will be one of the world’s biggest copper mines, with production in its early years of about 500,000 tonnes per year, just as demand for the metal increases because of the energy transition.

3. Hong Kong accounting watchdog launches second probe into Evergrande and PwC The investigation is connected to how the Evergrande subsidiary and PwC classified “restricted bank deposits and other loans”, the guarantees provided on those loans, and the disclosure of related party transactions, Hong Kong’s Financial Reporting Council said.

4. Slow wind farm approvals risk green goals, say renewable energy groups The chief executives of Denmark’s Vestas and Ørsted, the world’s largest manufacturer of wind turbines and biggest offshore wind farm developer, respectively, said governments needed to back up their green rhetoric by making it easier to go through an often convoluted planning process.

5. Germany must cut gas use by 20% to avoid winter rationing Businesses and households are bracing themselves for Europe’s biggest energy crisis in a generation, with Germany’s top network regulator warning that gas use must be reduced by a fifth to avoid a crippling shortage after Russia’s Gazprom throttled supplies in mid-June.

The day ahead

Economic data Minutes will be released from the Reserve Bank of Australia’s August policy meeting. The UK publishes preliminary second-quarter productivity estimates as the country’s productivity slump is scrutinised. The US will release industrial production figures.

Apologies for misnaming the Japanese prime minister in yesterday’s day-ahead. He is, of course, Fumio Kishida, not Yoshihide Suga.

What else we’re reading

At 75, India is finally ready to join the global party The country is on track to surpass the UK, Germany and Japan to become the third-largest economy by 2032. Its entrepreneurial spirit and an increasingly efficient welfare state may give India the edge in a slowing world, writes Ruchir Sharma.

Why the Fed might be at ‘neutral’ already on monetary policy Fed chair Jay Powell has been skewered by his critics for claiming that the federal funds rate was now at “neutral” at his July 27 press conference. But there is a conceivable way that Powell might be right, says Edward Yardeni.

Arctic warming four times faster than rest of planet: study Scientists have for a long time known that the Arctic is heating faster than the rest of the planet, but have not agreed on a rate. The warming effect and long-term sea ice decline are considered two main indicators of climate change.

Crypto poses serious challenges for regulators Even as the crypto industry craves the legitimacy that regulation offers, it will also try to minimise oversight, says Eswar Prasad. To guard against that, regulators must answer a few basic questions.

Business Book of the Year The FT’s annual award has been narrowed down to 15 titles. While subjects range from interest rates to tech, the common theme that emerges is the many challenges facing the global economy.

Work & leisure

August is the traditional month for making yourself scarce at the office. Why are so many still working this August, asks Pilita Clark:

At first I thought I was the only one with an unexpectedly active office. But others in the city have the same problem. One friend who had his hopes of a quietly productive August dashed by office busyness blames the rise of hybrid working.