BBC reports that a US warship has sailed close to a disputed island in the South China Sea claimed by China. The USS Stethem sailed within 12 nautical miles of Triton Island, which is part of the Paracel Islands. The tiny island is also claimed by Vietnam and Taiwan. China called the US move "a serious political and military provocation" and said it would take "all necessary means to defend national sovereignty and security". The so-called "freedom of navigation" operation happened just hours before US President Donald Trump was due to hold a pre-arranged phone call with his Chinese counterpart Xi Jinping. This is the second such operation conducted during Mr Trump's presidency. In May, the USS Dewey sailed less than 12 nautical miles from an artificial island built by China called Mischief Reef, which is part of the Spratly Islands.

Taiwan military jets scrambled to shadow a Chinese aircraft carrier passing through narrow waters separating the two sides en route to Hong Kong to mark the 20th anniversary of the former British colony's return to China. The Liaoning fleet will be open to the public in Hong Kong and showcase the "military might" of the Chinese naval force, Xinhua citied Yang Liang, China's People's Liberation Army Navy spokesman, as saying. It is due to arrive on Friday, Hong Kong media said. Chinese President Xi Jinping swore in Hong Kong's new leader on Saturday with a stark warning that Beijing will not tolerate any challenge to its authority in the divided city, in his strongest speech yet amid concerns over what some perceive as increased meddling by Beijing. The Soviet-built Liaoning, whose home port is in northern China, entered Taiwan's air defense identification zone (ADIZ) on Saturday and was sailing just west of the middle of the Taiwan Strait on Sunday, Taiwan's defense ministry said in a statement. Taiwan military jets and ships were deployed in response to monitor the fleet's passage, the ministry said...It was the third time that the Liaoning has sailed near self-ruled Taiwan, which China claims as its own, in recent months for what Beijing has said were routine drills in December and again in January.

CNBC reports that China laid the groundwork to finally get its stocks included in the key emerging markets benchmark and now the country is taking rapid steps to get its bonds a similar global stamp of approval. On Monday, China plans to launch a "bond connect" that gives foreign investors access to mainland China's more than $9 trillion debt market through Hong Kong. The move will likely pave the way for billions in fund inflows, and for Chinese credit to join prestigious global fixed income indexes, analysts said. "I think probably more international bond indexes will consider adding Chinese bonds into their indexes because one of their criteria is ease of access to the Chinese bond market," said Ivan Man Kuen Chung, associate managing director at Moody's Asia Pacific. He expects that could happen in the next year or two, especially since China's efforts to open up domestic markets to foreign investors have "developed quite rapidly."