AGP Executive Report

Han Kuang Drills: Taiwan’s President Lai inspected day five of the island’s biggest annual war games, with forces practicing coastal defense and concentrated firepower, including missile boat and coast guard drills in Kaohsiung and air-defense checks in Taoyuan. Drone Deterrence: Taiwan is also accelerating fleets of drones and unmanned surface craft to make any Chinese invasion harder and costlier, drawing lessons from Ukraine’s drone use. Defense Budget: Taiwan’s cabinet will propose a 16% rise in 2027 defense spending, pushing the budget above NT$1.1 trillion as Taipei boosts modernization. Typhoon Dolphin: The storm swept past north of Taiwan and then hit China’s eastern coast, triggering evacuations of hundreds of thousands and more than 1,300 flight cancellations in Shanghai; Taiwan saw heavy rain, ferry suspensions, and dozens of flight cancellations. Trade Outlook: Taiwan’s exports are forecast to top US$850 billion this year as AI-driven demand keeps momentum strong. Fuel Prices: CPC and Formosa will keep domestic gasoline and diesel prices unchanged for the week. Uganda Entry Issue: Taiwan is seeking answers after reports that Taiwanese passports were seized and entry denied in Uganda, with possible links to earlier visa suspensions tied to Ebola.

Cross-Strait Military Tensions: Taiwan’s Defence Ministry reported 4 PLA aircraft sorties, 6 PLAN vessels and 9 official ships around the island, with 2 aircraft crossing into Taiwan’s northern and southwestern ADIZ, as Taiwan monitored and responded. Han Kuang Drills: President Lai Ching-te boarded a domestically built missile boat in Kaohsiung to oversee coastal defense drills, while Kinmen forces staged live-fire drills against simulated landings during the annual Han Kuang war games. Typhoon Dolphin Disruptions: Heavy rain from Typhoon Dolphin hit northern Taiwan, prompting flight cancellations to China; in Shanghai, more than 1,300 flights were cancelled and about 300,000 people were relocated as the storm was expected to strike Zhejiang and parts of Fujian. Defense Industry Pressure: The US Pentagon asked defence firms to speed up weapons production and deliveries after interceptor and missile stocks were depleted during the Iran war, with a push for faster schedules. Taiwan-Linked Tech & Research: Taiwan’s Nokia signed a 5G expansion deal with Taiwan Mobile to deploy AI-driven network tools, while SKUAST-K in India selected six students for fully funded Taiwan research internships under TEEP. Local Life & Health: A Taiwan nutritionist warned that diets high in sweets, fried and processed foods can harm hair growth by depriving follicles of key nutrients like protein, vitamin D, iron and zinc.

Typhoon Dolphin: The storm battered Japan’s Okinawa and Kagoshima, injuring at least six and cutting power to tens of thousands of buildings, while Japan canceled hundreds of flights; China shut ports and suspended ferries as it raised alerts, and Taiwan also reported typhoon-related disruptions including bridge lane closures and transport adjustments. Cross-strait maritime tensions: China issued a temporary Taiwan Strait shipping traffic restriction tied to Dolphin, and Taiwan rejected it as an overreach over international waters, with the Coast Guard saying it saw no unusual Chinese ship activity. Han Kuang drills: Taiwan President Lai Ching-te oversaw coastal strike and evacuation-style contingency drills during the island’s annual Han Kuang exercises, including simulated drone and missile-boat operations aimed at countering a potential Chinese assault. Defense leak case: A former soldier was sentenced to about 2 years and 7 months for leaking details of Taiwan’s Hsiung Feng II missile manual to China. Semiconductor momentum: TSMC said it is accelerating 3nm output ahead of schedule, while SK hynix approved huge AI-memory investments through 2033, underscoring Taiwan’s central role in the AI chip supply chain. Pacific diplomacy: Taiwan will attend the Pacific Islands Forum in Palau as a development partner after being blocked last year.

Cross-Strait Politics: Taiwan’s Interior Ministry has moved to seek a Constitutional Court order to dissolve the pro-Beijing Chinese Unification Promotion Party (CUPP), arguing it has ties to organized crime and alleged violations of national security and election laws—an unprecedented step that’s already sparked debate over whether security concerns are being used to curb dissent. Military Readiness: President Lai Ching-te oversaw coastal strike drills during the annual Han Kuang war games, including missile-boat operations and low-flying drone activity, as Taiwan tests command coordination and homeland defense amid China’s repeated threats. Maritime Pressure in a Storm: Taipei called China’s proposed traffic-control rules for ships entering the Taiwan Strait during Typhoon Dolphin “ridiculous,” saying Beijing has no right to restrict access to international waters. Weather Watch: Typhoon Dolphin is expected to bring heavy rain to northern Taiwan from Saturday night into Sunday, with alerts in multiple counties and cities. Tech & Defense R&D: Taiwan’s NCSIST and Shield AI demonstrated coordinated autonomous drone search missions, highlighting growing local capabilities in unmanned systems. Human Interest: Taiwanese ocean-themed influencer Li Runrun died suddenly at 36, with her mother posting a brief tribute online.

Han Kuang Drills: Taiwan’s annual war games are in full swing, with Day Three focusing on defending key capital infrastructure and testing autonomous drone software, while President Lai participates in wartime evacuation and “decapitation” response drills amid China’s heightened pressure. U.S.-Taiwan Security: A senior U.S. lawmaker, Michael McCaul, signals continued support for Taiwan’s defense and drone procurement, as Taiwan’s military drills point to deeper alignment with Washington. Cross-Strait Exchanges: Beijing hosted a cross-Strait civil society exchange in which more than 500 Taiwan-based groups met counterparts, with mainland officials urging more visits and cooperation. China-Japan Tensions: China lodged a diplomatic protest over Japan’s new defense white paper, which calls China Tokyo’s biggest strategic challenge and highlights Taiwan-linked drills. Semiconductor & Solar Tariffs: The U.S. moves on polysilicon trade measures, adding pressure to chip and solar supply chains that Taiwan firms say they can manage. Economy & Prices: Taiwan’s inflation remains a concern for the third straight month, while AI-driven exports keep growth momentum strong. Family Policy: More fathers are taking parental leave, but gender gaps in caregiving still persist. Health Alert: A large Taiwan study links PDE5 erectile dysfunction drugs with higher glaucoma risk.

Han Kuang Drills: President Lai Ching-te joined Taiwan’s annual Han Kuang exercise, with troops and reservists deploying nationwide and the Danjiang Bridge set to be sealed as part of a simulated defense of the capital region. Cross-Strait Gray-Zone: Taiwan’s Coast Guard said it repelled four Chinese vessels near Kinmen after warnings, with the incident tied to the start of the drills. Tech Security: Taiwan is investigating suspected China-linked firms over alleged illegal tech talent poaching, while officials warn a China-run job platform could be used as psychological warfare. AI Supply Chains: A senior U.S. official called Taiwan a key partner for AI supply chains under the Pax Silica initiative, highlighting Taiwan’s role in semiconductor cooperation. Defense-Drone Cooperation: U.S. Rep. Michael McCaul said he’s optimistic about Taiwan-U.S. co-producing drones, pointing to demand for systems without Chinese components. Travel & Connectivity: EVA Air plans nonstop Taipei–Delhi flights starting in December, boosting Taiwan–India links. Business & Circular Economy: GreenBidz secured strategic investment from Headwater Capital to expand its AI-powered industrial asset recovery and circular economy platform.

Typhoon Dolphin: Taiwan’s airlines and ferry services adjusted schedules as the storm nears, with Starlux canceling some Taichung–Okinawa flights and EVA Air canceling all Saturday Taiwan–Okinawa routes; the Maritime and Port Bureau also suspended parts of the Keelung–Matsu and Houbihu–Orchid Island ferry services. Cross-strait security drills: Taiwan kicked off its biggest annual Han Kuang exercises as China pressure grows, including simulations of invasion scenarios and reservist mobilization, while Taipei also warned the public ahead of an Aug. 13 air defense drill. Economy watch: Taiwan’s July inflation eased slightly to 2.54% year-on-year, but remains above the 2% alert threshold; producer and import prices jumped, raising concerns about imported inflation. Tech & markets: TSMC raised capex to $64 billion to meet AI-driven demand, while Cathie Wood added more TSMC shares, signaling continued faith in on-device AI growth. Education ties: Taiwan’s government-funded scholarships in the Philippines hit a record 147 recipients for 2026-2027, reflecting rising interest in studying in Taiwan.

Han Kuang Drills: Taiwan kicked off its 10-day Han Kuang exercises with President Lai Ching-te taken by armored personnel carrier to a command center, rehearsing how the government would keep operating during emergencies and potential “decapitation” scenarios. Cross-Strait Security: The drills run alongside reservist and civil defense mobilization, with scenarios including blockade-breaking, coastal defense and air-raid preparations as China ramps up pressure. U.S.-Taiwan Cooperation: Taiwan’s defense chief Wellington Koo said military cooperation with the U.S. is broader than public arms sales, while stressing Taipei doesn’t plan around direct U.S. intervention. Tech & Security: Reuters reports the Trump administration is preparing to ban Chinese-made data-center optical transceivers by end-2026, citing risks to AI infrastructure. Markets: Taiwan stocks jumped as tech shares rose, with optimism tied to easing Middle East tensions and hopes for Strait of Hormuz reopening. Weather Watch: China issued an orange wave alert and renewed a blue typhoon alert for Dolphin, with strong winds expected near waters east of Taiwan. Food Safety: Taiwan’s tainted cooking oil scandal widened as lawmakers questioned reporting delays involving state-run Taisugar.

Han Kuang Drills Begin: Taiwan kicked off its biggest annual “Han Kuang” war games on Aug. 5, running Aug. 5-14, with reservists and troops practicing responses to a potential Chinese invasion, including beach live-fire drills and civil “urban resilience” drills that disrupt mobile internet and test air-raid readiness. Cross-Strait Tensions, Diplomacy: China again rejected Japan’s 2026 Defense White Paper, accusing Tokyo of “false narratives” and interference over Taiwan, while Taiwan’s opposition leader urged Xi to help avoid war. Defense Tech Push: Taiwan is working to integrate counter-drone systems across services, but a report says AI and drone defense adoption faces governance, infrastructure, cybersecurity, and workforce gaps. US Arms Deal Watch: US lawmakers say a new US$14 billion Taiwan arms package is headed to Congress, raising concerns it could complicate US-China talks. Drone Export Pressure: China tightened drone export controls to the US with stricter case-by-case licensing. EVA to New Delhi: EVA Air will launch nonstop Taipei–New Delhi flights on Dec. 1, five round trips weekly, as Taiwan-India ties deepen in tech and manufacturing. Typhoon Dolphin Disruptions: Typhoon Dolphin is expected to affect Japan’s Okinawa and has already led to flight cancellations and schedule changes for Taiwan carriers. Food Safety Row: Taiwan’s health minister said Taisugar was not in violation over a cooking-oil scandal involving benzopyrene levels, after CUOC’s rejected oil batch. Tech Market Mood: July’s semiconductor sell-off dragged tech funds, even as AI-linked strategies still lead 2026 returns. Taiwan Science & Health: Researchers used a silver-coated cicada wing to boost molecular sensing signals, and a review suggests particle chemoradiotherapy may improve survival in locally advanced pancreatic cancer.

Military Drills: Taiwan kicked off the annual Han Kuang exercises (Aug. 5-14), including live-fire drills and for the first time temporary limits on mobile internet, as officials test commanders’ ability to adapt to unexpected enemy moves amid rising China pressure. Cross-Strait Security: President Lai told the Ketagalan Forum that Taiwan will resist China’s “ethnic unity” law and transnational repression, warning against infiltration and “red terror.” China Talent Probe: Taiwan’s justice authorities searched 64 locations and questioned 114 people in an investigation into 17 Chinese firms suspected of illegally recruiting chip and other high-tech talent. Market Watch: The Taiwan Stock Exchange loosened trading rules from Aug. 10 to ease “liquidity killer” effects, including shorter restriction periods and faster matching intervals. Tourism Boom: Taiwan reported record tourism spending of US$11 billion in 2025, up 10%, with visitors increasingly spending on accommodation, dining, and entertainment. Science & Climate: Academia Sinica researchers said probiotics may help corals resist bleaching stress, offering a potential new tool for reef restoration. Sports & Culture: Taiwanese model makers won 12 medals at the 2026 Philippine Scale Model Show, and Taiwan’s Joanna Garland earned a spot in the Australian Open’s 1 Point Slam spotlight.

Cross-Strait Security: Taiwan will kick off the Han Kuang drills this week, testing for the first time how to counter a PLA maritime blockade, including counter-landing, convoy escort and joint counter-blockade missions as China ramps up gray-zone pressure. Diplomacy & Messaging: President Lai Ching-te used the Ketagalan Forum to urge countries to unite against China’s “ethnic unity” law, warning it enables transnational repression and censorship. Maritime Watch: Taiwan Coast Guard footage again spotlights Chinese activity near the US-Taiwan undersea cable network, underscoring fears of intelligence gathering. Defense & Regional Tensions: China hit back at Japan’s new defense white paper, calling it “false narratives” meant to justify Japan’s military buildup. Tech & AI Economy: Wistron says AI server demand remains strong and capacity is being expanded, while Taiwan’s export orders produced in the US tripled in 2025 as companies shift advanced production. Semiconductor Supply Chain: ASUS, MSI and Gigabyte are reportedly preparing Q3 motherboard price hikes of up to nearly 50% as PCB and component costs surge. Disaster Relief: Tzu Chi delivered emergency supplies to Japan’s Kumamoto after the 7.1 quake, including beds, tents and water purification units.

Japan Earthquake Response: TSMC says its Kumamoto fab has fully returned to normal after the July 28 quake, and it will donate 250 million yen for relief. Taiwan Markets: The Taiwan Stock Exchange will ease “disposition stock” cooling rules from Aug. 10, shortening the cooling period to five trading sessions and tightening matching intervals. U.S.-Taiwan Trade Pressure: 25 U.S. states sued to block Trump’s new broad tariffs on 60 trading partners under forced-labor claims, with Taiwan named among the targets. Cross-Strait Security: Taiwan’s NSC secretary-general Joseph Wu warns China’s coast-guard and gray-zone pressure aims to make the public “grow numb,” while the MOFA welcomed U.S. House Foreign Affairs Committee chair emeritus Michael McCaul for talks on regional security and the Taiwan-U.S. partnership. Tech & AI Supply Chain: SpaceX is auditing suppliers worldwide to enforce a “non-China, non-Taiwan” standard, banning Chinese equipment and Chinese nationals tied to contracts. Global Tech/Industry: Japan’s new defense white paper pushes faster drone and AI-driven warfare adaptation and links defense investment to economic growth. Education & Culture: Taiwan’s team won 2 silvers and 4 bronzes at the International Linguistics Olympiad in Romania.

Cross-Strait Security: Taiwan is set to test private security guards at nine military academies starting Sept. 1, handling routine access control while sensitive duties stay with military personnel, ahead of this month’s Han Kuang drills. Defense & China Pressure: Taiwan reported detecting multiple PLA aircraft and PLAN vessels around the island, while a Chinese research vessel was also tracked hovering over undersea cables linking the U.S. with Taiwan and the Philippines—raising concerns about intelligence-gathering. AI & Youth Risk: A human rights advocate warned China’s youth camps for Taiwanese students could use AI deepfakes to coerce participants into “united front” activities. Economy & Industry: Taiwan’s manufacturing stayed in expansion for a 10th straight month in July, with AI-driven new orders and production boosting the PMI to 61.5. Semiconductors & Markets: After a global chip sell-off, TSMC briefly reclaimed a $2T market cap, though investors remain wary about AI spending and memory shortages. Travel & Aid: Tzu Chi sent earthquake relief supplies to Japan’s Kumamoto, and STARLUX launched its first European route, Taipei–Prague, starting with three weekly flights.

Cross-Strait Security: Taiwan’s Defense Minister Wellington Koo says cooperation with the U.S. Pacific Command could be “far closer than many people imagine,” as Taipei deepens military exchanges to strengthen defenses amid rising Chinese pressure. PLA Activity: Taiwan reported fresh PLA air and naval deployments around the island, with aircraft entering parts of its ADIZ and Taiwan responding with patrols and missile systems. Maritime Gray-Zone Tactics: A Bloomberg report says China’s Coast Guard has increasingly become a strategic tool to assert control in contested seas, using coercive tactics and operating alongside the navy—raising concerns for Taiwan’s future scenarios. U.S. Lawmakers Meet Taipei: President Lai Ching-te received a bipartisan U.S. House East Asia-Pacific subcommittee chair, reiterating support for Taiwan’s drone and non-red supply-chain goals. Energy Security: Taiwan’s LNG situation stays in focus: Papua New Guinea says long-term LNG contracts through 2030 remain secure even as Taiwan suspended some spot purchases. Politics at Home: Civic groups protested moves to dissolve a pro-reunification party, warning of political suppression. Earthquake Aid: Taiwan launched donations for Japan’s Kumamoto earthquake recovery and welcomed a Japanese lawmaker visiting Taipei. Sports: Seventeen-year-old Tanvi Sharma stunned the field to reach the Taipei Open final, while badminton coverage also highlighted Malaysian and Japanese results.

Cross-Strait Politics: Taiwan civic groups say the DPP’s move to seek dissolution of the pro-reunification Chinese Unification Promotion Party is an abuse of state power, urging authorities to withdraw the application and arguing that advocating reunification is not a crime. South China Sea: Taiwan’s MOFA reiterated sovereignty over South China Sea islands after the Philippines deposited an official nautical chart with the UN, calling for peaceful dispute resolution under international law and urging Taiwan’s inclusion in multilateral mechanisms. Defense & Security: Taiwan reported detecting multiple PLA aircraft and PLAN vessels around the island amid rising tensions, while the U.S. also criticized China’s patrols in Taiwan-managed waters as destabilizing. Weather: Typhoon Dolphin may bring heavy rain to northern Taiwan later next week, with the CWA warning that the storm’s track remains uncertain. Sports: Malaysia’s Aaron Chia-Aaron Tai and Pearly Tan-M. Thinaah finished runners-up at the Taiwan Open 2026, with both pairs losing in straight sets in the finals. Education & People-to-People: Taiwan said it has welcomed more than 50,000 Vietnamese students, surpassing that mark in 2025.

U.S.-China Tensions: The Trump administration added 43 Chinese firms to a trade blacklist under the Uyghur Forced Labor Prevention Act, citing forced-labor abuses in Xinjiang and raising the total to 187. Taiwan Economy: Taiwan’s Q2 2026 growth is estimated at 12.92% year-on-year, beating forecasts as exports, private investment, and consumer spending all ran stronger—fuelled by AI demand. AI in Sports: At Taipei’s WAVE AI Exhibition, Taiwan’s sports science teams showcased how AI can turn training footage into performance data for athletes and coaches, including shooting and other precision events. Indigenous Milestone: Taiwan recognized Siraya as its 17th Indigenous group, marking a major rights and identity milestone. Cross-Strait Security: China issued new rules for the Huangyan Dao reserve in the South China Sea, a move analysts say could further inflame disputes with the Philippines. Health & Safety: Taiwan suspended visas for Moroccans after Morocco halted visa processing for Taiwanese travelers, citing reciprocity. Business & Tech: TSMC’s blowout quarter couldn’t stop a broader semiconductor selloff, with investors questioning how sustainable AI spending will be.