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As the U.S. expands its bases, will the Philippines be able to maintain a balance with China?

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The Philippines granted the United States expanded access to its military bases on Thursday.

The defense ministries of both countries announced Washington would be granted access to four more regions under the 2014 Enhanced Defense Cooperation Agreement (EDCA).

The agreement was reached during a visit by U.S. Defense Secretary Lloyd Austin, who visited South Korea earlier this year to bolster deployment of advanced weapons such as fighter jets and bombers to the Korean Peninsula, also to deploy more military forces and weapons in the Philippines.

In a joint announcement, the Philippines and the United States agreed to accelerate the full implementation of the Enhanced Defense Cooperation Agreement, which aims to support combined training, exercises, and interoperability between the two countries.

As part of the agreement, the United States has allocated $82 million for infrastructure improvements at five existing EDCA sites and has expanded its military presence to four new regions in “strategic areas of the country,” according to the statement.

New bases target China

The statement did not specify where the new areas would be. The former Philippine military chief told Reuters that the United States had previously requested access to bases on the island of Palawan, which overlooks the disputed Spratly Islands in the South China Sea and the northern land mass of Luzon, the Philippines’ closest region to Taiwan.

Philippine military officials and defense experts said some government officials were concerned that news about these locations would anger China.

According to an analysis published in the Global Times, Luzon and Palawan are very close to the Taiwanese island of Nansha, respectively, and “the intention of targeting China could not be more obvious.”

More recently, U.S. forces have intensified and expanded joint training focusing on combat readiness and disaster response with Filipino troops on the nation’s west coast, which faces the South China Sea, and in its northern Luzon region.

Enhanced Defense Cooperation Agreement (EDCA)

The EDCA allows U.S. access to Philippine military bases for joint training, pre-positioning of equipment and the building of facilities such as runways, fuel storage and military housing, but not for a permanent presence.

Austin said: “This is not about permanent basing, but it is a big deal, it is a really big deal… This is an opportunity to increase our effectiveness, increase interoperability.”

The Philippines was home to two largest U.S. Navy and Air Force bases outside of the American mainland. However, after the Philippine Senate refused to extend the use of the bases, they were closed in the early 1990s.

Although American forces returned for large-scale combat exercises with Filipino troops under a 1999 Visiting Forces Agreement, they could not obtain a base. The Philippine Constitution forbids the permanent establishment of foreign troops and their involvement in local combat.

The 2014 EDCA allowed U.S. forces to pre-position equipment and return forces in Philippine military bases, but Marcos’ predecessor, Rodrigo Duterte, had suspended the practice to maintain closer ties with China.

After Marcos was elected president, Joe Biden was the first foreign leader to call to congratulate Marcos, and senior Washington officials visited the Philippines regularly.

Manila’s balance policy

Washington is keen to expand its security options in the Philippines against China, while Manila aims to strengthen its defenses against disputed territorial claims in the South China Sea and a possible escalation in the Taiwan Strait.

A senior White House official told the Financial Times the initiative was “part of their strategic efforts across the region,” stressing that it was very important to Biden.

The Philippines sees the United States as a crucial counterweight to China in the region, and Washington has pledged to come to the defense of the Philippines if Filipino forces, ships, or aircraft come under attack in the contested waters.

On the other hand, the Philippines is trying to pursue a policy of not taking sides between China, its largest trading partner, and the United States. Philippine President Marcos’ visit to China last month was an indication that Manila is seeking to maintain ties with Beijing. Marcos also reiterated his commitment to the “one China” policy in a recent private interview with the Financial Times.

That’s why Philippine officials insisted ahead of Austin’s visit that military cooperation with the United States “does not target any third party.”

The Philippines is critical to Washington

However, the revival of the defense relationship with Washington by Philippine President Marcos could change this balance policy. The U.S. is using the same stick on the Philippines that it uses on the Asia-Pacific countries – the “China threat”.

The Biden administration is pushing the idea that if Beijing challenges the Philippines’ control over the disputed islands in the South China Sea or attacks Taiwan, the Philippines will be at risk of becoming part of the battlefield.

In this context, Austin said during the visit that the United States and the Philippines are “committed to strengthening their mutual capacities to resist armed attack” and stressed that these defensive efforts are important against China’s influence on the South China Sea.

Lisa Curtis, an Indo-Pacific expert at the Washington-based CNAS think tank, also stressed that the Philippines’ position is critical to the entire U.S. alliance system in the Indo-Pacific. In the event of a dispute over Taiwan, Washington would certainly see Manila as a staging ground for logistical support and U.S. forces, Curtis said.

Meanwhile, the Philippine president is reportedly traveling to Japan next week to expand security and trade cooperation between Manila and Tokyo.

Beijing has voiced concerns about Marcos’ visit to Japan, according to two people familiar with the discussions, highlighting the challenge the Philippines faces in trying to balance its economic interests with China and its relations with the United States and its allies.

The extent to which the Philippines can successfully maintain the balance policy in the face of the attack attempt that the U.S. and NATO have pursued so far in the Asia-Pacific through the “Chinese threat” discourse remains a question.

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Pentagon plans covert spy ring for economic war on China, report says

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The US Department of War (Pentagon) is reportedly planning to establish an extensive network of deep-cover agents to wage economic warfare against China and other adversaries of the US.

According to a report by The Washington Post citing six sources familiar with the initiative, the plan has not yet been put into effect. The newspaper reported that the initiative remains at the planning stage. The Pentagon, however, denies that any such initiative exists.

The report said the operatives would pose as entrepreneurs or private sector employees while concealing their ties to the US government. The network’s mission would be to gather economic intelligence and counter China.

The programme is led by Tom Rakusa, who spent 39 years at the CIA. Rakusa serves as a senior adviser to Deputy Secretary of Defence Steve Feinberg.

The proposed spy network is seen as part of a broader policy by the Donald Trump administration to sharpen economic competition with other countries.

The US is already resorting to tariffs, export controls, and investment in strategic sectors, alongside expanding its economic intelligence gathering.

According to The Washington Post, the new initiative demonstrates the Pentagon’s growing influence under the Trump administration. The department is currently seeking a record budget of $1.5 trillion.

Trade war flares up again with Trump’s return to the White House

The trade friction between the US and China flared up again following Donald Trump’s return to the White House. In April 2025, Washington raised tariffs on Chinese goods to as much as 145%, and Beijing retaliated with tariffs of up to 125%.

In May, US Secretary of State Marco Rubio described China as the primary geopolitical challenge facing Washington. Rubio said that to avoid war, the two sides needed to manage their conflict of interests.

In July, Chinese expert Zheng Yongnian did not simply warn that underestimating the US could prove to be a “fatal mistake”; he stated it explicitly.

According to Zheng’s assessment, the US maintains its primacy through the role of the dollar, its military superiority, and its technological advantages.

Even so, the two sides agreed in June to declare a truce and lower tariffs. In autumn 2026, the US and China extended their trade truce until 10 January 2027.

US Treasury Secretary Scott Bessent said the extension would give the parties more time to discuss economic issues.

Trade deals do not eliminate the strategic contradictions between the two countries. Financial Times columnist Rana Foroohar likened the race between the two nations for commercial, technological, and geopolitical influence to the 19th-century “Great Game” between the Russian and British empires.

Foroohar cited China’s standing in shipbuilding and commercial maritime transport, as well as its expanding footprint in overseas ports, among its key advantages.

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Japan plans curbs on short-term home sales to cool urban prices

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Japan’s ruling Liberal Democratic Party (LDP) plans to restrict short-term property trading to rein in surging home prices in major urban centres, particularly Tokyo.

Led by Prime Minister Sanae Takaichi, the party aims to make support for working households a core priority ahead of local elections scheduled for April next year.

The LDP’s research commission on housing and land policy met on Wednesday to discuss the issue.

According to a report by the Nikkei Asia newspaper, Commission Chair and LDP lawmaker Midori Matsushima said at the opening of the meeting: “Prices of newly built condominiums across Tokyo’s 23 wards have doubled over the past decade. We must work on measures ensuring that people who wish to live in these homes can actually afford to buy them.”

Homeownership in the capital has become virtually unattainable for broad segments of the population. According to data from the Real Estate Economic Institute, the average sale price of a newly built condominium in Tokyo’s 23 wards rose %18.5 in fiscal 2025 compared with the previous year, reaching 137.84 million yen (around $872,000).

Meanwhile, statistics from the Ministry of Labour show that the average annual income of a full-time worker in the capital remained at 6.78 million yen in fiscal 2025. This widening gap between incomes and residential property prices is directly shaping political priorities.

During its campaign for the House of Representatives election in February, the LDP pledged to curb speculative transactions across metropolitan Tokyo and other regions. Earlier this month, a party project team focused on policies concerning foreign nationals also submitted a recommendation urging the government to introduce immediate tax measures against rising home prices.

Under current legislation, profits realized from properties sold within five years of acquisition are classified as “short-term capital gains”. These returns face a tax rate approaching %40, including income tax and local inhabitant tax.

Although this rate is twice the approximately %20 levied as “long-term capital gains” tax on properties held for more than five years, several party members argue it remains insufficient to deter speculation. Calls to tighten the framework may be considered as part of the annual tax reform package to be drafted in December alongside the LDP’s coalition partner, the Japan Innovation Party.

The ruling bloc wants to present concrete housing pledges to voters heading to the polls in April across numerous urban centres, including 22 of Tokyo’s wards where local assembly terms expire.

“We need to support families with children, who are typically at the stage of purchasing a home,” a senior LDP official said.

Opposition parties are also preparing alternative proposals that target not only prospective homebuyers, but also residents forced into the rental market by high property prices and now affected by escalating rents.

Tax steps take precedence over limits on foreign buyers

Several countries seeking answers to housing affordability pressures have imposed direct restrictions on foreign purchasers. In South Korea, real estate policies played a major part in the declining public approval ratings of President Lee Jae Myung.

In August 2025, authorities in Seoul introduced an approval requirement for foreign nationals buying homes in the capital and adjacent areas, while also mandating that buyers reside in the properties for at least two years.

Canada and Australia have enacted temporary bans on foreign residential purchases, while Singapore levies a %60 additional stamp duty on foreign buyers.

The role of overseas investors in Japan’s property market also drew debate during the February election. However, restrictions aimed directly at foreign nationals are viewed as potentially conflicting with international trade and services agreements.

Consequently, rather than imposing restrictions based on the nationality of buyers, the government is discussing tax measures aimed at speculative real estate deals, such as rapid resales.

Fears that sharp market measures could shake regional banks

Concerns have also surfaced that aggressive steps to force down prices could harm the wider national economy.

A senior LDP tax official cautioned that a steep drop in land prices could weaken local financial institutions, warning: “We must consider the impact on regional banks.”

The real estate sector accounts for roughly %18 of total lending by Japanese banks. This proportion sits well above the %10 level recorded during Japan’s bubble economy of the mid-to-late 1980s.

At certain regional banks, property lending accounts for nearly half of total loan portfolios.

According to March 2025 data from the Financial Services Agency, approximately one-quarter of all loans extended by regional banks to the real estate sector are concentrated directly in Tokyo’s five central wards.

Buoyant asset valuations, supported in part by rising stock indices, have underpinned strong public approval for the Takaichi administration. Observers note that property interventions designed to cool the market could drag down equity prices and weaken the government’s standing.

A senior official on the LDP research commission stressed that decision-makers must act with caution regarding the scope and timing of any measures intended to bring price increases under control.

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South Korea plans $120B spend on eight US nuclear power plants

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South Korea will spend $120 billion to construct eight nuclear power plants in the US under an agreement that provides for $350 billion in investments in exchange for lower tariffs.

The South Korean government also announced that Seoul and Washington will begin examining a liquefied natural gas (LNG) project in Alaska comprising a large-scale pipeline to transport natural gas from the north of the state to the south, alongside the construction of an LNG terminal for exports overseas.

Seoul stated that a decision regarding the LNG project will be made following a commercial feasibility study. However, US President Donald Trump said that South Korea would invest $54 billion in the project, pointing to an apparent lack of full coordination between the two sides on the matter.

Trade and Industry Minister Kim Jung-kwan said in a statement: “This announcement opens a new horizon of cooperation where the two countries join forces to develop joint commercial ventures in strategic areas directly linked to economic security and future sectors such as artificial intelligence, nuclear energy, and LNG.”

“We will adhere to the principle of prioritising national interests and investing solely in commercially viable projects,” Kim said.

Speaking at the White House, Trump characterised South Korea’s plans as “one of the largest energy infrastructure investments in American history”.

The announcement followed a meeting between Trump and South Korean President Lee Jae Myung roughly one year ago at the APEC Economic Leaders’ Meeting held in South Korea, where they agreed on the creation of a $350 billion investment fund.

Under that agreement, $150 billion was allocated to the shipbuilding sector and $200 billion to other sectors. In return, the US announced it would reduce tariffs imposed on goods imported from South Korea from 25% to 15%.

Under the nuclear power project, South Korea’s state-controlled utility will build two plants in the US, while Pennsylvania-based Westinghouse Electric will construct six plants.

According to the South Korean government, this will mark the first instance in which a foreign country builds its own nuclear power plants in the US.

South Korean firms are also evaluating the possibility of acquiring a stake in Westinghouse as part of negotiations over sharing profits generated by the project.

South Korea additionally announced that it will build a $22.3 billion natural gas-fired power plant in Texas with a capacity of 6,472 megawatts.

The facility will be designed to supply electricity directly to nearby data centres. The project’s first phase is targeted to begin commercial operations in 2029, with full-capacity operations slated for 2032.

Seoul also disclosed that it had agreed to allow the US to receive 50% of the profits generated by the projects until South Korea recoups all of its investments.

After South Korea fully recovers its total investment amount, 90% of the profits will go to the US.

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