The US and Japan have been conducting war games and joint military exercises in the event of a conflict with China over Taiwan, amid escalating concerns over the Chinese military’s assertive activity.
US and Japanese military officials began serious planning for a possible conflict in the final year of the Trump administration, according to six people who requested anonymity. The activity includes top-secret tabletop war games and joint exercises in the South China and East China seas.
Shinzo Abe, then Japanese prime minister, in 2019 decided to significantly expand military planning because of the Chinese threat to Taiwan and the Senkaku Islands in the East China Sea. This work has continued under the administrations of Joe Biden and Japanese prime minister Yoshihide Suga, according to three of the people with knowledge of the matter.
More US defence news: Donald Rumsfeld, a two-time US defence secretary and architect of the 2003 US invasion of Iraq, has died at the age of 88, his family said on Wednesday.
Five stories in the news
1. Financial services sector set for carve-out from G7 tax deal The UK is poised to secure an exemption for financial services from new global rules on taxing multinationals, in a move that would ensure the City of London’s largest banks do not pay more tax on their profits in other countries.
2. Deutsche Bank Hong Kong IPO licence to expire The German lender will be unable to sponsor initial public offerings in Hong Kong from July after it failed to replace two regulated staff on time, disrupting the company’s plans to relaunch its Asia equities business.
3. Economists predict at least two US interest rate rises by end of 2023 Elevated inflation will compel the Federal Reserve to raise US interest rates at least twice by the end of 2023, according to a new poll of leading academic economists for the Financial Times.
4. Record high tech M&A in south-east Asia Technology sector dealmaking in south-east Asia hit $19bn in the first six months of 2021, the strongest-ever start to a year, fuelled by acquisitions by leading groups Grab, Gojek and Sea. Subscribe to our Due Diligence newsletter for the latest news on global deals.
Elsewhere in dealmaking: the chief executive of Citizens Financial, which recently bought HSBC’s US retail banking business, has predicted there will be more opportunities for mergers and acquisitions as smaller banks struggle to keep up in the financial technology race.
5. Robinhood ordered to pay $70m penalty to US regulator The Financial Industry Regulatory Authority has ordered the retail trading platform Robinhood to pay more than $70m in penalties for causing what it described as “widespread and significant” harm to its customers.
Kim Jong Un, the leader of North Korea, has warned of a “grave incident” linked to the pandemic, stoking fears of an outbreak in the isolated country.
Opponents of Jair Bolsonaro have seized on an unfolding scandal in Brazil over the procurement of coronavirus vaccines to turn up the political heat on the rightwing president.
Southern European countries are in the unenviable position of having to restrict foreign tourism or risk the rapid spread of the Delta variant.
The day ahead
Chinese Communist party centenary China’s economic transformation over the past four decades is the landmark achievement of the Chinese Communist party, which celebrates its 100th anniversary today. President Xi Jinping is set to issue a keynote address in Tiananmen Square. Our editorial board writes that under Xi, China has morphed into an uncompromising authoritarian regime. (FT, SCMP)
Opec meeting The oil cartel will meet today to…