EL7.AI
GeopoliticsMedium•23 July 2026•
1 min read

China Launches Live-Fire Drills in Taiwan Strait After US-China Talks

Key Facts

1China announced the start of two-day live-fire military drills around Dongshan Island, bordering Guangdong province.
2The drills follow a day after talks in Manila between US Secretary of State Rubio and Chinese Foreign Minister Wang Yi.
3The US criticized recent Chinese encroachments near Taiwan and noted that a pending arms package to Taiwan is under internal review.

China has announced the commencement of two-day live-fire military drills in the Taiwan Strait, specifically concentrated around Dongshan Island near Guangdong province. These exercises follow closely on the heels of high-level talks in Manila between US Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi. According to reports, the US side criticized recent Chinese military activity near Taiwan, noting that a pending arms package for the island remains under internal review.

Escalating tensions in the Taiwan Strait typically heighten regional risk premiums, potentially weighing on Asian equities and the Yuan while driving flows toward safe-haven assets. Per market data, this geopolitical friction coincides with a period of steady monetary policy in China, where the 1-year Loan Prime Rate was maintained at 3% and the 5-year rate at 3.5% as of July 20, 2026.

Traders should monitor the situation as the drills continue daily between 2200 GMT and 1000 GMT.