US Defense Secretary Visits Asia-Pacific, US-Philippines-Japan Joint Military Exercise Intimidates China

Today’s Focus: Strengthening of Military Alliance between the United States and the Philippines, Enhancing Deterrence Against “CCP’s Aggression Threat”; Imminent Collapse! Xi Jinping Wants Foreign Companies In But Draws a Red Line; Surge in Gold Prices, Chinese Gold Jewelry Nears 1,000 per Gram Leading to Public Outcry.

On March 28th, US Secretary of Defense Pete Hagseth held a meeting with Philippine Defense Secretary Gilbert Teodoro and President Ferdinand Marcos.

Hagseth reiterated the “defense treaty signed between the US and the Philippines” and firmly committed to providing the Philippines with more advanced weapon systems and increasing joint training to enhance both countries’ capabilities in “high-end warfare,” strengthening deterrence against threats including CCP’s “aggression”. He emphasized that the US-Philippine alliance is “rock solid,” and the US will continue to advance defense cooperation to ensure regional security.

In recent years, the Philippines has faced continued pressure from CCP in the South China Sea, with Manila repeatedly accusing Beijing of hostile actions.

Ahead of Hagseth’s visit, CCP deployed two long-range bombers around the Huangyan Island. Though CCP did not publicly announce this, satellite images obtained by Reuters showed two planes parked on the east side of the island.

The high-level US-Philippine meeting comes at a time of escalating regional tensions, with both sides expressing a unified commitment to maintaining peace and stability in the Indo-Pacific region and the South China Sea.

Philippine President Marcos stated that Hagseth’s visit highlights the US government’s emphasis on the Indo-Pacific strategy and its steadfast support for its treaty allies.

Hagseth mentioned that the US will cooperate with allies to enhance defense capabilities, strengthen deterrence, and address CCP’s expansion in the region.

Hagseth added that the Philippines is his first stop in the Asia-Pacific region, and he plans to visit Japan next, expecting to meet with Japan’s Defense Minister Moto and Prime Minister Shou. He stated, “Our purpose on this trip is to strengthen our partnership with the Philippines. Furthermore, we will deepen our cooperation with Japan in a similar manner.”

Hagseth mentioned that the US, the Philippines, and Japan recently held their eighth joint military exercise in the South China Sea to further enhance trilateral military cooperation.

This exercise marked the eighth joint military drill among the three countries, with participating vessels including Japan’s JS Noshiro, the Philippine Navy’s BRP Jose Rizal, and the US Navy’s USS Shoup.

Following Hagseth’s appointment and under the leadership of President Trump, the US has realigned its global military deployment, shifting its military focus from Europe to Asia, clearly identifying CCP as a competitor to the US in the Asia-Pacific region.

Regarding CCP, Hagseth emphasized that the US does not seek war but must demonstrate sufficient military deterrence to ensure peace.

Regarding the enhanced cooperation between the US and the Philippines, CCP’s Foreign Ministry spokesperson Guo Jiakun expressed opposition. He stated that the Philippines should not cooperate with US actions or provoke military confrontation.

CNN noted that the presence of US forces is essential for Asian allies in countering CCP expansionism and North Korean provocations, assisting in resisting CCP’s expansion in the region and other potential threats.

Additionally, the US and the Philippines will conduct bilateral special forces training near the Batanes Islands in the northern Philippines, close to Taiwan. Hagseth assured that the US commitment is “rock solid,” and the US military will continue operations in the region to address potential security challenges.

Philippine President Marcos also pledged to work closely with the US to maintain regional stability.

Now shifting the focus to the South China Sea situation, let’s discuss China’s economy:

China’s economy continues its downward trajectory, coupled with significant uncertainty brought by the US-China trade war, pushing the Chinese economy towards the brink of collapse.

According to reports from Radio Free Asia, data indicates a significant decline in China’s attractiveness to foreign investment. Last year, China’s net foreign direct investment (FDI) dropped by $168 billion, marking the largest capital outflow since 1990. As of 2024, foreign investment in China amounted to only $4.5 billion, a mere 1.3% compared to the peak of $344 billion in 2021.

Given this backdrop, Xi Jinping recently met with dozens of multinational corporate executives in Beijing, including FedEx, Toyota, and Samsung.

During the meeting, Xi Jinping emphasized the immense appeal of the Chinese market. He claimed that China is an ideal, secure, and promising investment destination for foreign businesses.

Interestingly, while promoting the attractiveness of the Chinese market, Xi Jinping also cautioned foreign companies to comply with Chinese laws and expressed his desire for multinational corporations to “voice rationally” to avoid being involved in international games, suggesting that foreign companies should continue developing in the Chinese market rather than shifting to other markets.

Regarding this issue, Lai Rongwei, Executive Director of the Taiwan Inspirational Association, pointed out that CCP’s political intervention in the market reflects disrespect for market principles and regression in the rule of law. CCP’s system leads to a contradictory attitude towards foreign investors. Domestically, CCP incites nationalism and antagonism towards foreigners. Coupled with deteriorating international relations, foreign investment lack confidence. Furthermore, CCP frequently restricts the actions of foreign companies and individuals for national security reasons, driving them away. CCP desires to attract foreign capital but is reluctant to loosen controls, failing to dispel doubts among foreign investors and discouraging their reentry into the Chinese market.

Lai Rongwei highlighted that China is currently experiencing deflation, evident in the decline in consumer power, reducing incentives in the market. Additionally, heightened US pressure on CCP and escalating political risks make enterprises more cautious. Many large corporations are increasingly turning away from the Chinese market, even though they cannot completely disengage in the short term, this shift will not cease.

Analysts suggest that while CCP is promoting openness, it continues to intensify market interventions, causing a sustained decline in foreign enterprises’ confidence in the Chinese market.

Moreover, the greatest concern for foreign companies is the political uncertainty within CCP, despite Xi Jinping claiming that China is one of the world’s safest countries.

Ye Yaoyuan, International Studies Professor at St. Thomas University, believes that China is not a true rule of law country. Foreign enterprises face policy uncertainty and unfair competition in the market. Even if collaborating with state-owned enterprises, they find it challenging to secure long-term safety and benefits. Ye Yaoyuan noted, “Without genuine market openness and legal reforms, foreign investment risks persist. Moreover, CCP has had multiple cases of company seizures, eroding trust in the Chinese market. Previously relied on empty promises to attract foreign investment, after 30 years of lessons, such claims are no longer believed.”

Ye Yaoyuan further stated that Xi Jinping aims to open global markets to China but fails to reciprocally open China’s market, a policy inherently unilateral. Additionally, foreign enterprises investing in China are subject to risks such as technology theft, data leakage, and policy changes. While profitability might be achievable in the short term, for enterprises prioritizing long-term development, avoiding the Chinese market is advisable.

Transitioning from China’s market to the latest news in the gold market:

International gold prices hit a new high, leading to a substantial increase in mainland China’s gold jewelry prices. On March 28th, Chow Sang Sang’s 24-karat gold jewelry prices soared to 934 yuan per gram, with Lukfook Gold, Lao Miao Gold, and other brands increasing to 929 yuan per gram. Prices for brands like Chow Tai Fook and Chow Sang Fook stood at 921 yuan per gram.

Data from Wind Information revealed that as of 9:05 on March 28th, COMEX gold prices rose by 0.39%, reaching $3,103.1 per ounce, while London spot gold rose by 0.30%, at $3,064 per ounce, both hitting historical highs. Consequently, mainland China’s gold jewelry prices saw significant adjustments, with several brand prices surging by as much as 11 yuan per gram in a single day.

The continuous rise in gold prices has left many consumers exclaiming “unaffordable.” One netizen shared their desire to wait for gold prices to fall before purchasing gold bars, now realizing that the hope is futile as gold prices show no signs of decline.

Simultaneously, influenced by the volatility in the gold market, several banks have adjusted the thresholds for gold investment services.

On the evening of March 26th, Construction Bank announced that starting from March 31st, the minimum deposit amount for individual gold savings will increase from 700 yuan to 800 yuan. Following Ningbo Bank, Construction Bank became the second bank this month to adjust the minimum deposit amount.

Regarding future gold price trends, Goldman Sachs’ latest forecasts suggest that by the end of 2025, gold prices could rise to $3,300 per ounce, potentially surpassing $4,200 per ounce under certain extreme circumstances. The institution also pointed out that major Asian central banks may continue significant gold purchases in the next 3 to 6 years to meet their reserve objectives.

Although many institutions are optimistic about the upward trend in gold prices, there are still significant uncertainties in the market.

Goldman Sachs analysts believe that if a peace agreement is reached between Russia and Ukraine, it could trigger speculative gold market sales in the short term. However, the long-term impact would be limited. Furthermore, a significant stock market decline could trigger margin-driven gold liquidation, causing short-term setbacks in gold prices.

Given the persisting global economic uncertainties, as a hedge asset, the demand for gold remains robust.

And this wraps up our segments on the South China Sea situation, China’s economy, and the gold market.