Editor's note: Daryl Guppy is an international financial technical analysis expert. He has provided a weekly Shanghai Index analysis for media for the Chinese mainland for more than a decade. Guppy appears regularly on CNBC Asia and is known as "The Chart Man." He is a national board member of the Australia China Business Council. The article reflects the author's opinions and not necessarily those of CGTN.

U.S. House Speaker Nancy Pelosi "generously" gifted China a remarkable opportunity. It is entirely understandable why China took advantage of her strategic miscalculation. It's difficult to imagine any other situation where China would have been able to simultaneously conduct a series of live fire military drills from August 4 to 7 in six different areas that encircle the island of Taiwan from all directions without triggering a major confrontation.

Single-handedly, Pelosi has made this both possible and acceptable, providing China with the opportunity to safely demonstrate both resolve and restraint.

If any one of the six exercises had been held by themselves at any other time the reaction from the U.S. and its supporters would have been substantial. Such individual exercises would have been characterized as examples of China's "aggressive intent" but Pelosi has succeeded in showcasing these combined exercises as examples of a restrained response that is consistent with behavior in the rules-based order.

To hold six separate but simultaneous manoeuvres is both a triumph of planning and execution, and a clear statement of advanced competence. The China of today is not the China of 1997 when the then U.S. House Speaker Newt Gingrich paid a visit to Taiwan.

Enabling this demonstration of power, restrained by all the requirements of the global rules-based order, was certainly not the purpose behind Pelosi's narrow-minded visit to Taiwan, but it has been the major strategic result and it has effectively reset the balance in the region, showing what happens when two powers play by the same rules.

The Western media has ignored this strategic failure and focused on misrepresenting details around the 12 nautical mile territorial sea and air space limit, the much broader Exclusive Economic Zone (EEZ) and the self-proclaimed expansive Air Defence Identification Zone (ADIZ).

A report by the Australian Broadcasting Commission claims that a senior defence analyst told correspondent Bill Birtles that, traditionally, it's not just the 12 nautical miles that designates territorial waters. Birtles says China has "long been aware that they should stay at least 30 nautical miles away from Taiwan, otherwise they're risking a confrontation."

This has all the hallmarks of a new "tradition" whipped up to justify U.S.-led outrage at China's response. The claim is certainly news to those who frame and monitor the UN Convention on the Law of the Sea (UNCLOS) agreements – to which the United States is not a signatory.

"The UN Convention on the Law of the Sea is a completely understood treaty and an accepted part of the architecture of the global rules-based order," said Australia's Defence Minister Richard Marles. 

Marles and others choose to misrepresent the significance of self-declared zones to incorrectly give these the same status as applied to the concept of the 12 nautical mile limit.

The EEZ comprises an area which extends from 12 nautical miles to 200 nautical miles. The EEZ confers rights to explore, exploit, conserve, and manage natural resources of the seabed, subsoil, and waters above it. It's not sovereign territory and the use of these waters for exercises does not involve the exploitation of resources covered by EEZ agreements.

The current China exercises replicate the way the U.S. and its Quad partners, namely – India, Australia and Japan, make frequent use of these international EEZ waters for military exercises.

The oft-quoted global rules-based order also offers clear distinctions between types of airspace. The self-proclaimed ADIZ extend beyond territorial limits and into international air space. These zones are often unnecessarily large. Japan's ADIZ extends as far as the northern boundary of Taiwan's ADIZ and intrudes deeply into China's ADIZ. The Philippines ADIZ abutts the southern border of the Taiwan ADIZ.

The ADIZ zones bear little direct relationship with coastlines and represent an ambit claim to international airspace. Activity, including military flights in this international air space, is advised and monitored. This includes the on-going surveillance flights conducted by Australia, the United States and others.

The key question now revolves around how others will adjust and react to this.  Forget Taiwan. That is a distraction regularly trotted out by U.S. politicians, particularly when they want to improve their chances in domestic mid-term elections. The U.S. has got confirmation of what it often claimed – a powerful, competent, advanced competitor that must be included in the calculus of peace and stability.

Pelosi's visit did little to advance or impede progress on the Taiwan question. Her visit did give China an unprecedented opportunity to test a variety of strategies and manoeuvres in a way that was not seen as unnecessarily provocative and which enables China to move with greater confidence in the future.

China's calibrated response was not a rejection of the global rules-based order. All activity took place within the boundaries defined by those rules. China's response shows the rules can be applied by all participants, however much this may discomfort those accustomed to picking and choosing which rules they observe.

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