Taiwan launches largest-ever military drills | East Asia Tonight (Jul 9)

Key Concepts

• Han Kuang Drills: Taiwan's annual military exercises.
• Gray Zone Tactics: Actions short of open warfare, like cyberattacks and disinformation.
• Kill Chain: Integrated system for rapid target detection and destruction.
• Whole of Society Resilience: Ensuring civilians, cities, and businesses are prepared for conflict.
• Dual-Use Items: Goods usable for both military and civilian purposes.
• Trump Tariffs: Imposition of duties on imported goods by the US under President Trump.
• ASEAN: Association of Southeast Asian Nations.
• Producer Price Index (PPI): Measures changes in prices received by domestic producers.
• Consumer Price Index (CPI): Measures changes in prices paid by consumers for goods and services.
• Deflation: Decrease in the general price level of goods and services.
• Net Portfolio Value: The total value of an investment portfolio after deducting liabilities.
• Climate Transition Program: Investment strategy focused on climate-friendly companies.
• Core Plus Infrastructure: Assets like data centers and renewable energy plants.

Taiwan's Military Drills and Civil Defense

• Taiwan launched its largest ever Han Kuang military drills, mobilizing 22,000 reservists.
• The drills, running from today until the 18th, coincide with civilian defense exercises.
• The live-fire phase lasts 10 days, double the usual length, simulating cyberattacks, disinformation, and amphibious landings by the PLA.
• New weaponry includes US-supplied HIMARS rocket launchers, Taiwan's Lancord 2 air defense system, and new drones, integrated into a "kill chain."
• Civil defense plays a bigger role with urban resilience drills in major cities like Taipei, Taiong, and Tynan, testing air raid responses, shelter coordination, and casualty rescue.
• Supermarket chain PXmart is participating, with staff practicing alerts and guiding customers to shelters.
• The goal is "whole of society resilience," preparing civilians and businesses for conflict.
• Beijing banned exports to eight Taiwan companies in aerospace, shipping, and technology sectors, accusing them of collaborating with pro-independence forces.
• China's Defense Ministry called Taiwan's Huan Kuang military exercises "nothing but a bluff."

US Trade War and Copper Tariffs

• President Trump is broadening his trade war, imposing a 50% tariff on imported copper and warning of levies on semiconductors and pharmaceuticals.
• He sent 14 letters to trading partners, setting August 1st as a deadline for negotiations.
• The 50% tariff on copper has "stunned markets" and initially propelled prices to record levels.
• Copper is the third most consumed metal, used in construction, electronics, transportation, and machinery.
• The US produces half of its refined copper, importing the rest from Chile and Canada.
• The Trump administration aims to ensure a resilient copper supply chain, viewing it as critical for national security.
• Tony Waterman reports that copper traders have been stockpiling copper in anticipation of the tariff.
• The US is a top copper producer with mines in Arizona, New Mexico, and Utah, but still imports 50% of its needs.
• Ramping up domestic production faces bottlenecks in refining capacity, environmental concerns, and permitting processes.
• Trump has previously invoked emergency powers to boost production of critical metals and minerals.

ASEAN Meeting and Trade Tensions

• Malaysia's Prime Minister Ano Ib Brahim urged ASEAN countries to enhance intra-ASEAN trade.
• ASEAN foreign ministers are meeting in Koala Lumpo, including talks with the US and China.
• Six of 10 ASEAN members could face export tariffs of 25%-40% if no deal is struck with the US by August 1st.
• Many ASEAN countries, like Thailand, Cambodia, and Malaysia, rely heavily on the US market.
• Malaysia Trade Minister Zafro Azis said they've had 25 rounds of talks with the US, but there are "intrinsic red lines" they cannot cross, such as procurement and sovereign rights.
• The US wants Malaysia to buy more and invest more in the states and eliminate tariffs on the US imports.
• China is portraying itself as a trusted partner for Southeast Asia, while the US stresses the importance of a secure and open Indo-Pacific region.
• Malaysia is hopeful of striking a win-win deal with the Trump administration before a 25% tariff is applied to its US exports in August.

China's Deflation and Economic Data

• China's factory gate deflation deepened, with the producer price index (PPI) falling 3.6% year-on-year in June, the biggest drop in nearly two years.
• China's consumer price index (CPI) edged up 0.1% last month, flipping into expansion for the first time in 5 months.
• The Shanghai Composite barely changed, while the Hong Kong index fell due to deflationary fears.
• China's big copper miners listed in Hong Kong were under pressure after Trump's 50% tariff announcement.

Analysis of Copper Tariffs and Trade Strategy

• Craig Lang from CRU Group explains that the US copper price has been trading 5-20% above the LME price due to tariff anticipation, now increased to nearly 30%.
• Imports of copper into the US have averaged around 200,000 tons per month, compared to 75,000 tons last year.
• China's demand growth is strong, driven by over 5% growth this year, with demand growth year to date growing at around 10%.
• China accounts for around 60% of global refined copper consumption but domestic mine production only meets around 12% of its requirements.
• James Crabtree from the European Council on Foreign Relations believes the copper tariffs are primarily about China, aiming to reduce reliance on Chinese copper products.
• He notes backlash in Tokyo over perceived humiliation in trade negotiations with the US.
• Crabtree suggests the best way to negotiate tariffs is to be very tough, like China's use of rare earths.
• He argues that the US is engaging in economic self-harm by cutting itself off from trade-intensive Southeast Asian countries, benefiting China.
• Vietnam is in a good position due to its trade deals, while others are more vulnerable.
• Crabtree believes Trump thinks his tariff strategy is successful in gaining leverage for better deals, but it damages the US's reputation as a reliable partner.

Other News

• South Korea repatriated six North Koreans who expressed their desire to return home.
• Singapore's Tamasi Holdings reported a record high net portfolio value of 434 billion Singapore dollars, up 45 billion Singh from its last report.
• Singapore Central Bank has changed its approach to green investments to lower financial risks and boost resilience.
• Starbucks China is reportedly evaluating bids for a potential stake sale.
• Nissan has reportedly halted manufacturing of three vehicle models for Canada at two of its US factories.
• China's box office revenue for 2025 reached 4.18 billion US dollars, quicker than last year.
• Parts of China are inundated as heavy monsoon rains hit, triggering landslides and flood warnings.

Conclusion

The news program covers a range of critical economic and geopolitical developments in East Asia. Key takeaways include Taiwan's intensified military preparedness amid rising tensions with China, the escalating US-China trade war with new tariffs on copper and potential levies on other sectors, and the resulting impact on ASEAN nations and global trade dynamics. China's economic challenges, including deflationary pressures and extreme weather events, are also highlighted. The program underscores the complex interplay of economic, political, and security considerations shaping the region's future.