Taiwan to hike defence spending to more than 3% of GDP | East Asia Tonight (Aug 21)

Key Concepts

• Taiwan defense budget increase
• China's presence in Tibet
• China-Pakistan economic and security cooperation
• US government investment in TSMC
• South Korean cultural influence
• US tariffs and their impact on Asian economies
• Taiwan's caution towards Hong Kong
• China's rare earth magnet exports and Malaysia's role
• Japan's approach to investment in Africa
• Security guarantees for Ukraine
• North Korea's support for Russia
• China's response to New Zealand's foreign interference claims
• Microsoft's cybersecurity measures

Taiwan Defense Spending

• Taiwan is increasing its defense spending to over 3% of GDP, a level not seen since 2009.
• The proposed defense budget for 2026 is approximately $31 billion US, a 23% increase from the previous year.
• For the first time, the budget includes funding for the Coast Guard, recognizing its frontline role in facing off against Chinese ships in the Taiwan Strait.
• The budget allocates funds for modernization projects, including the indigenous submarine program, missile upgrades, and asymmetric weapons.
• The move signals Taiwan's intent to invest in its own defense industry for long-term capabilities, rather than solely relying on US arms sales.
• The budget proposal needs to be approved by the opposition-controlled parliament.
• While outright opposition to defense spending is unlikely, there may be bargaining over specific allocations, such as funding for submarines versus missiles and coast guards.
• Analysts expect some version of the budget to be approved, but the final amount may be reshaped during negotiations.

China's Activities in Tibet

• President Xi Jinping visited Lhasa, the Tibetan capital, to celebrate the 60th anniversary of Tibet as a Chinese autonomous region.
• Xi called for ethnic unity and religious harmony to stabilize and develop Tibet.
• Party officials emphasized the region's economic progress while warning against attempts to undermine Tibet's stability.
• The Tibet Autonomous Region was established in 1965, following a failed uprising by the Dalai Lama in 1959.
• Human rights groups and Tibetans in exile have criticized China's control in Tibet as oppressive, but Beijing rejects these accusations.
• Xi urged Tibet to stay committed to the party's leadership and adapt Tibetan Buddhism to socialist society.

China-Pakistan Cooperation

• Foreign Minister Wangi visited Pakistan to strengthen political, economic, and security ties.
• Wongi and his Pakistani counterpart discussed deepening cooperation and preparations for the 75th anniversary of diplomatic ties.
• China expressed satisfaction with Pakistan's counterterrorism efforts to secure Chinese officials working on China-Pakistan Economic Corridor (CPEC) projects in Balochistan.
• China is interested in extending CPEC phase 2 to Afghanistan, aiming to boost Kabul's trade, transit, and development opportunities.
• China sympathized with Pakistan regarding the devastation caused by floods and pledged assistance for rescue and relief efforts.
• China believes it can play a role in de-escalating tensions between India and Pakistan and is interested in stability in South Asia.

US Investment in TSMC and South Korean Investment

• The US government is considering an investment in Taiwanese chipmaker TSMC.
• This follows US Commerce Secretary Howard Lucknik's statement that Washington is seeking equity in chipmakers receiving funding from the Chips and Science Act, including TSMC, Samsung, and Micron.
• TSMC received $6.6 billion in subsidies under the Chips Act to produce semiconductors in the US.
• TSMC plans to invest an additional $100 billion in the US, bringing its total commitment to $165 billion.
• South Korean firms are reportedly planning to announce around $150 billion in new private investments in the US during President EJ Mong's summit with President Trump.
• This is in addition to the $350 billion South Korea agreed to invest in the US under a trade deal.
• Samsung is building a multi-billion dollar semiconductor plant in Texas, and Hyundai has pledged $21 billion for auto and steel facilities.

US Tariffs and Asian Economies

• Japanese automakers are beginning to pass on part of the cost of US tariffs to American buyers.
• The average price of Japanese cars exported to the US rose in July to 3.41 million yen, up from 3.38 million in June.
• The Trump administration imposed an additional 25% tariff on imported cars, bringing the total duty to 27.5%.
• Toyota increased prices in July by an average of $270 per model, still less than the full cost of the tariff.

Taiwan's Caution Towards Hong Kong

• One of Taiwan's largest pension funds, the Bureau of Labor Funds (BLF), is guiding outside firms against using Hong Kong-registered entities to manage its money.
• The BLF manages about $235 billion and has been verbally asking third-party managers to exclude Hong Kong entities from its contracts since last year.
• This cautious stance is due to Hong Kong becoming increasingly intertwined with mainland China, despite its "one country, two systems" setup.
• The BLF's mainland China investment stood at about $1.58 billion, or 0.8% of the fund's total exposure, as of the end of 2023.

China's Rare Earth Magnet Exports and Malaysia's Role

• China's exports of rare earth magnets rebounded in July after reaching deals with the US and Europe to relax curbs.
• Shipments jumped nearly 75% on month to reach a six-month high.
• Malaysia aims to position itself as a key player in the global critical mineral supply chain, which is currently dominated by China.
• Malaysia is home to the largest heavy rare earth processing plant outside China, owned by Australia's Liners Rare Earths.
• Liners has invested over $700 million in Malaysia and contributed over $1 billion to its economy.
• Malaysia is also welcoming investments from China and other global partners in rare earth processing.
• The government strategic task force projects that the production of super magnets will generate some $3 billion in revenue by year 2030.

Japan's Approach to Investment in Africa

• UN Secretary-General Antonio Gutierrez called for greater investment in Africa, particularly in green energy.
• Japan is encouraging its private sector to increase investments in Africa.
• Japan's approach to Africa is characterized by a renewed interest due to geopolitical turbulences and the need for steady partners and rising markets.
• Japan offers a steady partnership to Africa and does not have the colonial baggage of Western countries or the reputation of political intervention that China has.
• Japan is launching the Nacala corridor project to connect Mozambique with landlocked Malawi, Zambia, and Zimbabwe.
• Japan is also offering scholarships for AI and digital training.

Security Guarantees for Ukraine

• Ukrainian President Vladimir Zalinski said that a meeting with his Russian counterpart Vladimir Putin is possible only after security guarantees for Ukraine have been agreed upon.
• Zalinsky stated that Keev wants to have an understanding of these guarantees in 7 to 10 days.
• Russia insists that it must be included in any talks on security guarantees for Keefe.
• Zalinsky does not want China to play a role in guaranteeing Ukraine's security, citing Beijing's alleged support for Moscow.
• NATO military leaders have met to discuss postwar security guarantees for Kev.
• Russia will not accept the deployment of European forces in Ukraine.

North Korea's Support for Russia

• North Korean leader Kim Jong-un praised his nation's troops who are helping Russia in its war against Ukraine.
• South Korean intelligence agencies reported that Pyongyang sent more than 10,000 soldiers to Kusk in 2024, along with artillery shells, missiles, and long-range rocket systems.
• The ties between North Korea and Russia have grown closer in recent years.

China's Response to New Zealand's Foreign Interference Claims

• The Chinese foreign ministry accused New Zealand of spreading rumors after Wellington's spy agency called Beijing the most active power engaging in foreign interference within the country.
• The Chinese embassy in Wellington said that New Zealand was poisoning bilateral ties and that firm measures would be taken if necessary.

Microsoft's Cybersecurity Measures

• Microsoft has limited some Chinese companies' access to its early warning system for cybersecurity vulnerabilities.
• This follows speculation that Beijing was involved in a hacking campaign launched against Microsoft SharePoint servers last month.
• Chinese firms affected by the move will no longer receive the proof of concept code from Microsoft.

Conclusion

The news program covers a range of significant events in East Asia, including Taiwan's increased defense spending, China's activities in Tibet and its cooperation with Pakistan, US and South Korean investments in semiconductor manufacturing, the impact of US tariffs on Asian economies, and various geopolitical tensions involving Ukraine, North Korea, and China. The program also highlights Malaysia's growing role in the rare earth mineral supply chain and Japan's renewed interest in investing in Africa. The discussions around security guarantees for Ukraine and cybersecurity measures by Microsoft underscore the complex and evolving challenges in the region and globally.