Beijing answered Lai with sanctions and patrols, not war games. Taiwan's market fell on oil and US inflation.

President William Lai gave his National Day speech on 10 October. “Taiwan cherishes peace, but we will not give up our freedom,” he said. Beijing’s Taiwan Affairs Office said the speech “disregards facts, distorts the truth, misleads the public and reveals ulterior motives.”

PLA aircraft around Taiwan, 13 MND reports 81 sorties; peak 21 (report of 10 Oct) 14 October 2026. Taiwan Ministry of National Defense; Valtor sum What Beijing did not do was hold war games. The Taipei Times noted that China held war games shortly after Lai’s first National Day speech in 2024, did not do so in 2025, and last held them in late December 2025. Taiwan’s defence ministry’s 13 daily reports dated 2 to 14 October count 81 PLA aircraft sorties in total, by Valtor’s sum. The busiest, on 10 October, had 21, 13 of them across the median line, filed before Lai spoke; the next two counted 12 and 4. The reports of 4 to 6 October listed no aircraft at all. The ministry flagged two “joint combat readiness patrols”. The first, on 6 October, had 14 sorties, nine across the median line, working with PLA Navy ships. The second came at midday on 14 October: 13 sorties from 9:30 a.m., 11 across the median line, again with navy ships. The same day a task group led by the carrier Liaoning sailed into the western Pacific for what Xinhua, citing the PLA Navy, called “annual routine training”, “not directed at any specific country or target.”

Beijing’s answer came as sanctions. On 12 October China’s foreign ministry sanctioned Paraguay’s technology minister, Gustavo Villate, and Belize’s foreign minister, Francis Fonseca, to “penalize them and serve as a warning to others.” On 14 October the Taiwan Affairs Office barred VWAY, a company linked to the father of the DPP’s Taipei mayoral candidate, Puma Shen, from doing business in China. Taiwan’s Mainland Affairs Council called it “a malicious attempt to coerce Taiwanese society and interfere in our democratic elections.”

TAIEX, 13 October 48,341.31, -1.95% 13 October 2026. Taiwan Stock Exchange, via Taipei Times USD/TWD close, 13 October 32.085, first close above 32 in two months 13 October 2026. Taipei Times The market’s worst days came from elsewhere. On 13 October the TAIEX fell 960.65 points, or 1.95%, to 48,341.31. Foreign investors sold a net NT$165.34 billion, the third-largest net sale on record. The Taiwan dollar closed at 32.085 to the US dollar, its first close above 32 in two months. The Taipei Times reported that shares tracked “an overnight sell-off in US technology stocks after a Houthi attack on a Saudi Arabian airport sent crude oil prices soaring.” Adam Lin of Moore Securities also cited a Seoul chip sell-off and speculation about delayed Nvidia shipments.

TAIEX, 15 October 46,969.87, -3.41%; foreign net sale NT$302.56bn 15 October 2026. Taiwan Stock Exchange, via Focus Taiwan (CNA) Update, 15 October. Two days later came a bigger fall, and again not from the Strait. The TAIEX lost 1,655.96 points, or 3.41%, to 46,969.87, its sixth-steepest one-day point loss, according to the Central News Agency. Foreign investors sold a net NT$302.56 billion. Dealers blamed “fears of a Federal Reserve rate hike” after US consumer prices rose 3.7% in September, above the 3.6% forecast. “Rising interest rates will raise fundraising costs for AI companies,” said Kevin Su of Hua Nan Securities. The Taiwan dollar closed at 32.265. The defence ministry’s report that morning counted 15 PLA sorties, 13 across the median line: busier than the week before, short of an exercise. The next two reports, on 16 and 17 October, counted 8 and 9.

Taiwan exports, September US$87.22bn, +60.9% y/y, monthly record 30 September 2026. Ministry of Finance, via Focus Taiwan Underneath, the numbers are at records. TSMC reported record quarterly profit on 15 October, and Taiwan’s exports reached a monthly record of US$87.22 billion in September, up 60.9% on the year.

Valtor’s inference Our inference, not a claim in any source: for two weeks the transmission into Taiwan’s assets ran through oil, US interest rates and the AI trade, not through the Strait. Beijing’s choice of targeted sanctions and patrols over exercises keeps the military gauge that risk dashboards watch below exercise level. It does not mean pressure has stopped; it has moved to tools that do not show up in a sortie count.

What to watch

• The daily sortie count. A report above the 21 of 10 October, or a third joint combat readiness patrol this month, without a matching US or Taiwanese trigger would be a sign Beijing is stepping its military signalling up.
• The Taiwan dollar, at 32.265 on 15 October. A move back below 32 would mark the end of this episode; a run toward that day’s 32.452 high would mark its spread.
• Further sanctions on firms linked to candidates. VWAY is the second firm tied to Shen’s father to be sanctioned, after one in June 2025, Focus Taiwan reports; a case involving another candidate would widen the pattern.

The risks that moved Taipei’s market this fortnight were imported. Beijing kept its own signal mostly political, and below the level of an exercise.