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In today's bulletin: Will China close a US mission in retaliation, Sabah government set to fall to Muhyiddin's pact, filming licence needed for all videos in Malaysia, Hong Kong losing to Singapore in arbitration venue, China joins the race to Mars, and more.

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SPYING, SLANDER AND SPECULATION IN LATEST US-CHINA SPAT

The international community is awash with speculation that Chinese espionage attempts were behind the Trump administration's ordered closure of the Chinese consulate in Houston, US correspondent Charissa Yong writes.

The New York Times quoted Mr David Stilwell, the top US diplomat for East Asia, as describing the consulate as the "epicentre" of research theft by the Chinese military in the United States, without giving details to support the claim. Republican senator Marco Rubio, a vocal China critic, was more specific, accusing the consulate of being a "massive spy centre", also without evidence. China has rubbished those claims as malicious slander.

In retaliation against the US, Beijing may shut one of America's diplomatic facilities in China, political observers say. There are six US diplomatic missions in mainland China: Chengdu, Guangzhou, Shanghai, Shenyang, Wuhan, and the embassy in Beijing; and one in Hong Kong, which has been at the centre of much of US-China conflict in recent weeks.

But a reciprocal move by Beijing to close the US consulate-general in Hong Kong would be akin to a nuclear option, Hong Kong correspondent Claire Huang writes. Such an order would be devastating not just to Hong Kong, but also to the US and China, analysts say.

Delve deeper: How the China-US Cold War is intensifying

MALAYSIA'S SABAH GOVT SET TO FALL TO PM MUHYIDDIN'S COALITION

Malaysia's Sabah state is on the verge of changing governments, with assemblymen formerly loyal to chief minister Shafie Apdal expected to defect to the Perikatan Nasional pact helmed by Prime Minister Muhyiddin Yassin, bureau chief Shannon Teoh writes.

At least 14 assemblymen have agreed to desert Datuk Seri Shafie - a staunch ally of former premier Mahathir Mohamad - and back his predecessor and rival Musa Aman instead, well-placed sources told The Straits Times.

This would make Sabah the latest in a string of states lost by Pakatan Harapan (PH) and its allies after its federal government collapsed at the end of February. PH was left without majority support in Parliament after Tan Sri Muhyiddin led some 40 lawmakers out of the coalition.

Read more: Mahathir mulls forming new party as Umno adviser says Najib, Zahid should step aside

ST ASIAN INSIDER VIDEO: DEALING WITH THE DRAGON

A divided South East Asia and a hesitant India have left China with the space to push boundaries both in the South China Sea and in the Himalayas. But that may be changing as Asean countries with overlapping claims in the South China Sea see stronger backing from the US, and India beefing up on both its land and sea borders.

As US-China relations rapidly worsen, Manila-based political scientist and author Richard Heydarian and Aparna Pande, Director, Initiative on the Future of India and South Asia at the Hudson Institute in Washington, discuss options for Asean and India with the Straits Times US bureau chief Nirmal Ghosh in the latest edition of the ST Asian Insider video. Click here to watch the video.

Go deeper:

Nirmal Ghosh: China's overreach has produced a growing coalition against it

Charissa Yong: US stance on South China Sea may pave way for stronger responses

July, a timeline: The month US-China relationship took a turn for the worse

TRAVEL IN A TIME OF COVID-19

The Civil Aviation Authority of Singapore (CAAS) and the European Union Aviation Safety Agency (Easa) will collaborate to create common standards to promote safe air travel amid the coronavirus pandemic. The cooperation is the first of its kind in Asia. The agreement is aimed at boosting traveller confidence to facilitate the recovery of air travel between Singapore and Europe, and will be done through coordination on measures to protect the health and safety of passengers, air crew and airport staff.

Elsewhere in Asia, Indonesia's most popular holiday destination of Bali is pressing ahead with a plan to welcome back visitors to revive its tourism-reliant economy, even as the resort island continues to report a surge in new coronavirus cases. Indonesians can visit Bali's beaches, temples and popular surfing spots from July 31, while international tourists will be allowed from Sept 11.

Australia's second most populous state of Victoria recorded another 403 new Covid-19 cases on Thursday (July 23) as its city of Melbourne remains under lockdown. Hong Kong recorded a fresh daily high of 118 new infections, all but seven of them locally transmitted. And Thailand is set to extend its state of emergency to the end of August despite having recorded no new local cases for two months.

Also read: Don't expect first Covid-19 vaccinations until early 2021, says WHO

HONG KONG LOSING TO SINGAPORE AS ARBITRATION VENUE

Global firms are increasingly ditching Hong Kong as a venue option for settling disputes through arbitration, and picking rival destinations like Singapore, Paris and London instead. The accelerating shift is one of the clearest signs yet that China's tightening grip on the Asian financial hub has eroded trust in its legal system, arbitration lawyers say.

Beijing's recent bypassing of the Hong Kong legislature to impose a sweeping national security law, has raised doubts about the independence of the city's arbitrators, who are now subject to a vaguely worded statute carrying potential life sentences for some crimes. Of particular concern is the potential impact on contract disputes with Chinese firms.

CHINA LAUNCHES MARS MISSION IN GLOBAL RACE TO SPACE

China has launched an unmanned probe to Mars in its first independent mission to another planet. Its largest carrier rocket, the Long March 5 Y-4, blasted off with the probe from the southern island of Hainan on Thursday afternoon. The probe is expected to reach Mars in February, where it will attempt to deploy a rover to explore the planet for 90 days.

China's independent mission is a bid for global leadership in space and a display of its technological prowess and ambition. If successful, the Tianwen-1, or "Questions to Heaven", will make China the first country to orbit, land and deploy a rover in its inaugural mission.

Also this week: United Arab Emirates launches mission to Mars

IN OTHER NEWS

MALAYSIAN MINISTER SAYS LICENCE NEEDED FOR ALL FILMING: The country's communications and multimedia minister said all individuals are required by law to have a licence for filming activities, raising a huge question of whether people are breaking the law each time they post videos on YouTube, TikTok, Facebook Live and other social media platforms, Malaysia correspondent Ram Anand writes.

CHINESE 'DARK FLEETS' FISH OFF NORTH KOREA DESPITE SANCTIONS BAN: "Dark fleets" believed to be from China have been fishing in North Korean waters, potentially netting Pyongyang millions of dollars in illicit fees and forcing smaller North Korean vessels further afield, according to a series of reports this week. More than 900 such ships were observed in 2017, with more than 700 tracked in 2018 and 2019, the researchers said.

COURT ORDERS EX-M'SIAN PM NAJIB TO PAY S$550M IN ADDITIONAL INCOME TAX: The Kuala Lumpur High Court has ordered former Malaysian prime minister Najib Razak to pay additional income tax totalling RM1.69 billion (S$550 million) to the government. Najib is also facing five corruption trials linked to state investment fund 1Malaysia Development Berhad (1MDB).

That's it for today. Thank you for staying with us and check back for more good stories tomorrow.

Magdalene