※[Global Morning Briefing] summarizes global news delivered by Seoul Economic Daily.
"Within Range of U.S. Mainland"...China Fires First SLBM from Nuclear Submarine in Pacific
China launched a submarine-launched ballistic missile (SLBM) from a nuclear submarine for the first time on July 6, completing a nuclear triad spanning land, air and sea. The Chinese military said it struck a precise target point with an SLBM carrying a training mock warhead in international waters of the Pacific, and state media, citing military expert Song Zhongping, reported that the projectile was likely a new JL-3 with a range exceeding 10,000 kilometers.
The launch, which puts the U.S. mainland within range, was the first Pacific SLBM test in 44 years since 1982, and is interpreted as an expression of discontent aimed at the United States. Jeffrey Lewis, director of the East Asia Nonproliferation Program at the Middlebury Institute of International Studies, told The New York Times that China would increase missile tests in the Pacific going forward.
The Chinese government claimed the launch was a routine exercise notified in advance, and Chinese Foreign Ministry spokesperson Mao Ning asked neighboring countries to refrain from excessive interpretation. In contrast, U.S. State Department spokesperson Tommy Pigott expressed concern over China's opaque nuclear weapons buildup, while Japanese Chief Cabinet Secretary Minoru Kihara and Taiwanese Presidential Office spokesperson Kuo Ya-hui pushed back, citing a lack of transparency and heightened regional tensions, respectively. Australia and New Zealand also expressed displeasure over the South Pacific being used as a test site.
Amid this, U.S. President Donald Trump said at the White House on the 6th that he expects Chinese President Xi Jinping to visit the United States around September 24, raising expectations for a resumption of summit diplomacy.
Rates Rose for the First Time in 31 Years, So Why Did the Yen Collapse Further?
As the yen's value has fallen to its lowest level in 40 years, speculative yen-selling has surged. The weak-yen phenomenon is expected to continue for the time being, as a strong-dollar trend is projected to persist amid a robust U.S. economy and the Federal Reserve's tightening stance.
Bloomberg reported on the 6th, citing data from the U.S. Commodity Futures Trading Commission, that as of the 30th of last month, hedge funds' yen short positions stood at 138,000 contracts, the largest in 19 years since 154,000 contracts in June 2007. In 2007, the U.S.-Japan base rate gap widened to as much as 5 percentage points just before the Lehman Brothers bankruptcy, when demand for the yen carry trade peaked.
Behind the expansion in speculative selling lies distrust of the Bank of Japan's monetary policy. Although the Bank of Japan raised its base rate to 1% last month for the first time in 31 years and hinted at the possibility of further hikes, concerns remain in the market that the pace of tightening is slow relative to prices and the exchange rate. The removal of language on fiscal consolidation from the policy stance finalized by the Sanae Takaichi cabinet on the 30th of last month, strengthening an expansionary fiscal stance, is also cited as a factor in the yen's weakness. Even though the Japanese government mobilized a record 11.73 trillion yen over one month starting in April this year to defend the yen, it failed to quell market concerns.
Long-term interest rates also showed an unstable trend. The 30-year super-long government bond yield rose to as high as 4.105% at one point on the morning of the 7th, approaching the 4.2% peak recorded in May. Owing to the influence of new Fed Chair Kevin Warsh, who emphasized price stability and signaled a tightening stance, the scale of bets on a stronger dollar also grew to about $40 billion, marking the highest level since December 2015. The Nihon Keizai Shimbun reported that some observers say the yen could be pushed to the 170-per-dollar range if the Takaichi cabinet's funding plans are not clarified.
This dovetails with a trend in which the administration of U.S. President Donald Trump is strengthening sanctions, wary of the possibility that AI products could be misused by the military and intelligence agencies of countries of concern such as China and Russia. Earlier, the U.S. administration ordered foreign access to Anthropic's cutting-edge models Fable and Mithos to be blocked, and Anthropic temporarily suspended access to the two models for users worldwide, citing the impossibility of verifying nationality in real time. Fable, which is for the general public, subsequently had its export controls lifted after safeguards were put in place, but Mithos, which is for cybersecurity experts, is still provided only to certain trusted U.S. institutions.
However, the auction of Japan's 30-year government bonds held that day drew strong demand, somewhat calming the anxiety. The bid-to-cover ratio was 4.55 times, the highest since May 2019, and the tail—the difference between the lowest and average winning prices—narrowed to 4 sen, the tightest since January 2025. Immediately after the auction, the 30-year yield fell to 3.993% and the yen-dollar rate at one point declined to 161.67 yen, but it later turned upward again, showing a mixed pattern.
Bitcoin's "Big Hand" Wobbles...JP Morgan Sounds the Alarm
Strategy, a digital asset treasury (DAT) firm that had upheld a principle of never selling bitcoin, sold a record 330 billion won worth of bitcoin. This is interpreted as the result of a plunge in the bitcoin price making it difficult to raise cash, as capital for risk assets flowed into AI-related stocks and the possibility of a Federal Reserve rate hike within the year was added to the mix.
Strategy disclosed through a U.S. Securities and Exchange Commission filing on the 6th (local time) that it disposed of 1,363 bitcoins at an average of $59,256 on the 29th and 30th of last month, and 2,225 bitcoins at an average of $60,773 on the 1st through 5th of this month. Strategy Chairman Michael Saylor explained on X (formerly Twitter) that he sold $216 million (about 330.8 billion won) worth to pay dividends on digital credit securities.
This selling price was far below the average purchase price of $75,476, meaning a loss of more than $15,000 per bitcoin was locked in. Strategy disclosed that it recorded an $8.32 billion loss on digital assets in the second quarter alone. The payment of dividends on high-yield preferred stock (STRC) reaching 12% annually and the buildup of cash reserves were the direct background to the sale, and the fact that bitcoin fell to $59,000 on the 1st, increasing the burden of interest on unpaid debt, also had an impact. The current bitcoin price is about half the all-time high of $126,210 recorded last October.
Chairman Saylor had maintained a principle of not selling bitcoin—excluding a sale of 704 in December 2022 to offset corporate tax losses—until before May last year, but shifted his policy by selling in succession in May and June this year, citing dividend shortfalls. JP Morgan assessed that the very fact that a major buyer that had supported bitcoin demand has hinted at the possibility of selling would act as considerable downward pressure on investor sentiment.
"We Won't Use Nvidia"...DeepSeek Confronts Head-On with China's Own Chips
DeepSeek has set out to develop its own AI chip in response to U.S. semiconductor export controls. This is interpreted as a move to lower its dependence on Nvidia and strengthen China's own AI ecosystem.
According to Reuters, DeepSeek is reportedly discussing its own chip production with chip design, foundry and memory companies on the 7th (local time). The chip is intended not for training new models but for the inference stage, in which an already-trained model generates responses to users. DeepSeek has been using Nvidia and Huawei chips, and its inference model R1 in particular was known to have been designed for the Chinese market and trained on the Nvidia H800, which became subject to a U.S. export ban at the end of 2023. With the path to securing the latest Nvidia chips blocked, the Chinese government is encouraging its technology firms to develop domestic semiconductors.
Chinese authorities are also pushing measures to restrict foreign companies' access to domestic AI models. According to a person familiar with the matter, China's Ministry of Commerce held several meetings with Alibaba, ByteDance, Zhipu AI and others to discuss regulations spanning both closed and open types, but whether and when they will be implemented has not yet been decided.
