Reuters reports, "the Philippines will hold separate naval exercises with U.S. and Japanese forces this week on a Philippine island that is not far from the disputed Spratly archipelago, where China's rapid creation of seven island outposts is stoking regional tensions. Manila, which has one of the weakest navies in Asia, has stepped up its security cooperation this year in the wake of Chinese assertiveness in the South China Sea, not just with ally Washington, but also with Japan and Vietnam. A Philippine military official said there was no plan for the Philippine, U.S. and Japanese navies to hold combined exercises on Palawan island, 160 km (100 miles) from the Spratlys, although the drills could intersect because Manila had limited naval assets."
"The U.S. and China will hold their seventh Strategic and Economic Dialogue this week in Washington. On the agenda will be a range of regional and global issues, including territorial disputes among Asian nations in the South China Sea. The six nations with competing claims to the area are China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan. The territories in dispute are the Spratly Islands, the Scarborough Shoal and the Parcel Islands. Beijing says it's nearly done with a land reclamation project the Spratlys, something that has drawn sharp criticism from Washington. Beijing dates its claim to the South China Sea to the Xia and Han dynasties, which ruled as far back as 2,000 B.C. During China's republican era, in the first half of the 20th century, it mapped and named 291 islands and reefs in the region. The U.S. says the disputed territory is in international waters and wants the United Nations to determine sovereignty," writes Al Jazeera.
Bloomberg writes, "China is reaching the limits of its ability to prolong a rally that turned 928 days old Friday. Beijing has encouraged companies to pursue splashy IPOs in order to sustain the excitement on stock markets, and lure Chinese households to open trading accounts. The thought is that if average Chinese feel wealthy, they'll buy into Xi's vision of a "China Dream" and the legitimacy of the Communist Party. But the market bubble has grown to unsustainable proportions. The median stock, for instance, has a price-to-earnings ratio of 98, while the Shanghai Composite, which has a heavy weighting toward low-priced bank shares, is valued at 23 times. The reason bank shares are so depressed, of course, is China's dueling bubble in debt. China has $28 trillion of public and private debt; then there's the unprecedented $363 billion of margin debt that's supporting shares."