Australian navy shadows Chinese warships within 150 nautical miles of Sydney

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

• An ‘unprecedented’ Chinese navy manoeuvre

• The US-Ukraine rift deepens

• The emerging winners in Asia amid the trade wars

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The Australian navy is shadowing Chinese warships 150 nautical miles east of Sydney, the furthest China’s navy has sailed down the eastern Australian coast.

Two Australian ships are following a Chinese naval task group — comprising two warships and a supply vessel — that appeared off the north-east coast of Australia a week ago, according to people familiar with the situation.

One person said it was “unprecedented” for the Chinese navy to sail so far down Australia’s east coast. They stressed that Beijing was normalising its projection of power beyond the first Pacific island chain, which stretches from Japan to Indonesia, and the second island chain, which runs from Japan through Guam to Micronesia.

“As the Chinese test their ability to project power further south, in addition to east and west, the question becomes how much they can hold at risk — how much they can signal to the Australians that they can threaten them,” said Charles Edel, an Australia expert at Washington-based think-tank CSIS. Read more about China’s ambitions in the Pacific.

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

• Economic data: Australia publishes the labour force survey for January and Hong Kong reports inflation data.

• Monetary policy: China is expected to leave its loan prime rate unchanged. (Reuters)

• Results: Alibaba, Fortescue and Anglo American report results.

Five more top stories

1. Donald Trump called Ukrainian President Volodymyr Zelenskyy a “dictator” and warned that he “better move fast or he is not going to have a Country left”. The US president hit out at his Ukrainian counterpart hours after Zelenskyy accused Trump of living in a “disinformation bubble”.

• Go deeper: Trump’s move to normalise ties with Russia has left Vladimir Putin “standing tall and proud”, said one expert.

• European security: The EU is considering redirecting €93bn in untapped pandemic recovery funds into its defence sector after the Trump administration warned it could withdraw US security support from the continent.

2. China’s holdings of US Treasuries have fallen to their lowest level since 2009, as Beijing diversifies into alternative assets. The value of US sovereign debt held by Chinese investors fell by $57bn to $759bn in 2024, data published by the US Treasury yesterday showed. But analysts say Beijing is trying to disguise its Treasury holdings.

3. Donald Trump has signed an executive order to take greater control of independent federal agencies, including important financial watchdogs. The US president’s latest move to tighten his grip on government institutions will force agencies including the Federal Reserve and the Securities and Exchange Commission to submit draft regulations for review. Critics argue the order is illegal.

• More US news: Donald Trump’s administration has terminated federal approval of New York City’s controversial congestion pricing scheme, sparking an immediate state-federal legal battle.

4. HSBC unveiled a goal of saving $300mn this year and cutting $1.5bn from its annual cost base by the end of next year, as it detailed the impact of chief executive Georges Elhedery’s overhaul for the first time. The bank said it expected its actions to trigger $1.8bn in upfront costs, including severance, in 2025 and 2026.

5. Brazil’s former leader Jair Bolsonaro has been charged with leading an alleged coup plot to remain in power after losing the 2022 election to Luiz Inácio Lula da Silva. The hard-right politician was accused by the attorney-general of leading a “criminal organisation” to subvert democracy in Latin America’s most populous nation.

News in-depth

European officials are awakening to an argument long made by Trump: the US no longer wants to be the region’s primary security guarantor. Trump is not the only US president to criticise the US’s Nato allies. This read asks: how can Europe defend itself without US help?

We’re also reading . . .

Chart of the day

Some economies in Asia — such as Malaysia, Singapore, Vietnam and increasingly India — are positioning themselves to be winners in Donald Trump’s trade war, writes Trinh Nguyen, a senior economist at Natixis Corporate & Investment Banking.

Take a break from the news . . .

Running clubs have sprung up across Hong Kong in the years since Covid-19 restrictions were lifted. Here are the best ones to join.