Beijing’s seizure of disputed South China Sea reef revives tensions with the Philippines

Good morning and welcome back to FirstFT Asia. In today’s newsletter:

• The latest South China Sea stand-off

• Trump’s trade war hits US ports and air freight

• Inside Interpol’s Singapore innovation lab

We start today with China’s move to proclaim sovereignty over a disputed reef in the South China Sea, which has triggered a new stand-off with the Philippines. Here’s what you need to know about the row over Sandy Cay.

What’s happening: The Philippines sent navy, coastguard and maritime police officers to Sandy Cay and two neighbouring sandbanks in the Spratly Islands yesterday to “uphold the country’s sovereignty, sovereign rights and jurisdiction” and displayed the national flag there, according to a statement published on X. The move came a day after China said it had “implemented maritime control and exercised sovereign jurisdiction” over the reef by showing its own flag there — the first such official declaration of sovereignty on or near a land feature in the disputed waters in at least a decade.

Why Sandy Cay matters: Although just a sand bank measuring little more than 200 sq m, Sandy Cay has strategic value because its categorisation as a rock could allow the nation controlling it to claim a territorial sea around it. That 12-nautical-mile radius would overlap with Thitu Island, the Philippines’ most important military foothold in the area. Sandy Cay is one of four reefs where Manila has suspected China of planning land reclamation works followed by further militarisation.

US-Philippine military drills: The row over Sandy Cay comes as Philippine and American troops are due to begin coastal defence and island seizure drills on the Philippine territory closest to the Spratlys today. The White House said on Saturday that the reports of China seizing Sandy Cay were “deeply concerning if true”.

Here’s what else we’re keeping tabs on today:

• Economic data: Singapore publishes first-quarter labour market figures and Malaysia reports March PPI inflation data.

• Canada’s election: Prime Minister Mark Carney will face off in a national election against Pierre Poilievre, a career politician whose leadership bid has been tainted by association with US President Donald Trump. The vote takes place after eleven people were killed when a car was driven into a large crowd in Vancouver on Saturday night.

• Results: Daiwa Securities, Tokyo Gas, Kikkoman, Komatsu and China Petroleum & Chemical Corp are among the companies reporting today.

Five more top stories

1. Donald Trump’s trade war with Beijing is starting to affect the wider US economy as container port operators and air freight managers report sharp declines in goods transported from China. Logistics groups said container bookings to the US have fallen sharply since the introduction of 145 per cent tariffs on Chinese imports to the US.

• Double tariffs: Foreign manufacturers in China are paying duties of 125 per cent to import components and then 145 per cent to export to the US.

• More US-China news: The liquefied natural gas industry has warned the Trump administration it cannot comply with new rules aimed at forcing them to use US transport vessels by imposing levies on Chinese-built ships docking at US ports.

2. Vanguard, the world’s second-largest asset manager, has ruled out re-entering China’s fund industry even as the group seeks to accelerate its global expansion beyond its biggest market in the US. Chris McIsaac, head of Vanguard’s international business, told the FT why it doesn’t make sense for the group to operate in China.

3. Russian businessman Albert Avdolyan has been hit with EU sanctions over Moscow’s war in Ukraine, but can partially circumvent the bloc’s travel ban thanks to a Maltese passport he bought under a “golden” visa scheme that faces a European court ruling on its future this week. The paid-for citizenship was given to politically exposed individuals, or people who later appeared on sanctions lists or were convicted of crimes.

4. Saudi Arabia and Qatar have said they will settle Syria’s outstanding debt to the World Bank, in a step that will help the conflict-ravaged country access funding for postwar reconstruction and public-sector salaries. The funding of about $15mn will be the first financial assistance to Syria from Saudi Arabia since the fall last year of Bashar al-Assad’s regime, a government that the kingdom had staunchly opposed.

5. Far-right politician Jordan Bardella has said he will run to become France’s president in 2027 if Marine Le Pen is blocked from running by a court judgment. “Marine Le Pen is my candidate and, if she were to be prevented [from running] tomorrow, I think I can tell you that I will be her candidate,” the 29-year-old Bardella told Le Parisien newspaper.

FT Magazine

In the leafy Singapore suburb of Tanglin, over the road from the British High Commission and the US embassy, and a block away from the Botanic Gardens, sits a modest research facility at the heart of efforts by law enforcement agencies to stay one step ahead of their increasingly sophisticated and professionalised criminal adversaries. Owen Walker goes inside Interpol’s innovation lab.

We’re also reading . . . 

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• Make America Pregnant Again: The Republicans want a “baby boom”. And Elon Musk can fertilise us all, writes Jo Ellison.

• Hank Paulson: If the US wants to win the AI race with China it must create a national energy strategy that prioritises speed, flexibility and cost-effectiveness, writes the former US Treasury secretary.

Chart of the day

Liverpool FC has won the Premier League despite spending less than their rivals across the summer and winter transfer windows, according to Transfermarkt data.

Take a break from the news

“Headphone dodgers” are the latest entrants in the centuries-long urban battles between noisemakers and their unwilling listeners. FT pop critic Ludovic Hunter-Tilney proposes a way to stop them.