SinoInsight  1     

Near the end of 2020, the CCP declared “victory” over the coronavirus and began rolling out vaccines. However, COVID is “re-emerging” across China in entire districts or pockets of at least seven provinces and directly administered municipalities. Local governments where coronavirus cases are spiking have entered “wartime mode.”

Shijiazhuang, the capital of Hebei Province, appears the worst hit:

• Jan. 5: The Hebei local government announced the entire province would enter “wartime mode,” with Shijiazhuang designated a coronavirus “high-risk area.” Shijiazhuang is currently the only “high-risk area” in China amid the current wave of COVID outbreaks. 
• Jan. 6: Shijiazhuang announces a citywide lockdown.
• Jan. 8: Eleven intercity routes leading from Beijing Capital International Airport and Beijing Daxing International Airport to other parts of Hebei Province are shut down. 
• Jan. 9: In a second press conference on the current “epidemic prevention and control situation,” the Hebei authorities confirmed the province has 139 active COVID cases and 197 asymptomatic cases. Hebei authorities also claim that Shijiazhuang authorities tested all 11 million of its residents between Jan. 6 and Jan. 8 for the virus and detected 354 positive cases. By 8:00 a.m. on Jan. 9, the province quarantined 11,708 people and opened 120 quarantine sites. Meanwhile, Shijiazhuang shut down all public transport and taxi services in the city. 

Beijing is particularly concerned about the outbreak of COVID in Hebei Province. According to a leaked recording from an internal meeting of the Beijing Municipal Commission of Housing and Urban-Rural Development on Jan. 5 that made the rounds on the internet on Jan. 6, local CCP officials expressed concern about the coronavirus spreading to Beijing via Hebei, especially with the PRC capital deriving a third of its active population and a sixth of its goods from the neighboring province. Also, according to a Jan. 8 report in Dajiyuan (The Epoch Times), a Party princeling living in a Beijing military compound disclosed that coronavirus control measures in the city are now very strict, with incoming visitors being immediately quarantined for up to 21 days (in a so-called “14 days + 7 days” format) regardless of whether they hail from a “high-risk area” or not. Only those who test negative after quarantine will be subsequently allowed entry to government or military residential buildings. 

The CCP has begun stepping up COVID control measures and propaganda. Mainland media cite experts as “explaining” that the latest coronavirus wave is due to the plague “secretly spreading for some time,” from concentrated cases in rural areas, where epidemic prevention and control measures were “weak.” Experts also claim that the coronavirus appeared to escape detection, with some people requiring four or more tests before discovering they were COVID-positive. Meanwhile, several areas in China (Beijing, Shanghai, Ningxia, Shandong, Henan, Anhui, Hubei, Hebei) have already issued notices encouraging businesses and work units to forbid workers from returning home for the Lunar New Year “unless necessary,” arrange “flexible leave,” and have workers spend the New Year where stationed if possible. Also, epidemic prevention and control headquarters in several cities have instructed “staff of Party and government organs, public institutions, and state-owned enterprises at all levels” to seek approval from their superiors if they must leave their area and to submit a report to headquarters.

Presently, the PRC and many countries in the world are facing the more infectious B117 strain of COVID-19. On Jan. 10, the U.S. Centers for Disease Control and Prevention announced that the B117 strain was detected in eight states, with California and Florida most afflicted. The B117 strain is proving to be 40 to 70 percent more contagious than previous variants of the virus.
OUR TAKE
1. We previously warned that CCP claims of “victory” over the pandemic and “controlling” the coronavirus are propaganda. Circulating on Chinese social media are reports by the Chinese citizenry that suggest that the epidemic situation in many locales after the end of lockdowns never improved significantly, despite CCP boasts. Mainland state media are not reporting the actual ground situation, with regime censors stringently policing COVID-related information. 

Two pieces of information above, namely, instructions to government staff to not return home for Lunar New Year and tough measures restricting human traffic flow in key areas, suggest the coronavirus spread in China is growing dire.

Deception is a key CCP trait. Communist China will continue to cover up the true extent of the latest COVID wave until its propaganda cannot paper over the cracks.

2. The CCP claims it has vaccinated 9 million Chinese as part of its free vaccination program and plans to vaccinate 50 million more ahead of the Lunar New Year season. Should the epidemic situation worsen in China in the days and weeks ahead, it would indicate that, a) PRC vaccines are far less effective than advertised by CCP propaganda, b) the vaccines are ineffective against the new strain of coronavirus, c) the virus spreads through the Chinese population faster than people can be vaccinated, or d) a combination of the three aforementioned factors.

On Jan. 7, Shanghai vaccine expert Tao Lina claimed on Weibo that the Sinopharm COVID-19 vaccine is the “most unsafe in the world” and produces 73 side effects. Tao later deleted his post after it went viral. If Tao’s assessment is correct, then this partially corroborates a prediction in our China 2021 Outlook, namely, that “China-produced vaccines may have serious quality defects.”

3. Assuming the latest coronavirus outbreak in China follows the trend we forecasted in our China 2021 Outlook, the PRC economy and regime stability will be severely impacted in coming months.

 

 

     SinoInsight  2     

Since the start of the new year, the Trump administration continues to be tough on the CCP, confronting the regime in a number of areas: 

Jan. 2

• During a conference call with British lawmakers regarding China, then-Deputy National Security Advisor Matt Pottinger said, “There is a growing body of evidence to say that a laboratory leak or accident is very much a credible possibility. Even establishment figures in Beijing have openly dismissed the wet market story.”

Jan. 4

• In a Newsweek article, Secretary of State Mike Pompeo and U.S. special presidential envoy for arms control Marshall Billingslea issued a warning on the PRC’s nuclear build up and lack of transparency. “Beijing refuses to disclose how many nuclear weapons it has, how many it plans to develop, or what it plans to do with them … Despite Beijing’s secrecy about its nuclear activities, we know China is pursuing a nuclear triad on land, in the air and at sea, and that it is rapidly growing and modernizing its capabilities.”
• FTSE Russell cuts three more Chinese firms (China United Network Communications, Semiconductor Manufacturing International Corporation, Nanjing Panda Electronics) from its global equity indexes per the guidance of an executive order by President Donald Trump.

Jan. 5

• Trump issued an executive order “addressing the threat posed by applications and other software developed or controlled by Chinese companies.”
• In an interview with Jan Jekielek of The Epoch Times’ American Thought Leaders Program, Secretary Pompeo said that the CCP threat is “now inside the gates” of America. “The Chinese Communist Party is here in America and the Trump Administration has begun in every dimension to turn the ship in the right direction to get America to once again do the right thing and protect itself from this Communist threat in China.”

Jan. 6

• Secretary Pompeo issued a statement condemning the mass arrest of pro-democracy advocates in Hong Kong. “The United States will not stand idly by while the people of Hong Kong suffer under Communist oppression. The United States will consider sanctions and other restrictions on any and all individuals and entities involved in executing this assault on the Hong Kong people, explore restrictions against the Hong Kong Economic and Trade Office in the United States, and take additional immediate actions against officials who have undermined Hong Kong’s democratic processes.” 
• Pompeo also announced the upcoming visit of U.S. Ambassador to the United Nations Kelly Craft to Taiwan, “a reliable partner and vibrant democracy that has flourished despite CCP efforts to undermine its great success. Taiwan shows what a free China could achieve.”

Jan. 7

• Secretary Pompeo approved the creation of a new Bureau of Cyberspace Security and Emerging Technologies in the State Department to deal with challenges by “China, Russia, Iran, North Korea, and other cyber and emerging technology competitors and adversaries.” 

Jan. 9

• Secretary Pompeo announced the lifting of self-imposed restrictions on the U.S.-Taiwan relationship. He noted that the U.S. “created complex internal restrictions” to regulate diplomatic relations with Taiwan “unilaterally, in an attempt to appease the Communist regime in Beijing.” Also, his statement “recognizes that the U.S.-Taiwan relationship need not, and should not, be shackled by self-imposed restrictions of our permanent bureaucracy.” 
• The governments of the U.S., U.K., Canada, and Australia issued a joint statement criticizing the CCP regime for “the mass arrests of 55 politicians and activists in Hong Kong for subversion under the National Security Law.”

 

OUR TAKE
1. The Trump administration’s latest flurry of tough China measures and statements appear to be partly an attempt to “lock” Team Biden to the hardline stance America has taken against the CCP regime over the past four years. Some observers, however, have noted that a Biden administration can simply reverse many of Trump’s China policies once in office. 

We believe Team Biden will likely retain many of the Trump administration’s tough China policies and measures at the onset to use as leverage against the Xi leadership. However, a Biden administration will likely gradually move to reinstate the pro-China “engagement” policy of yesteryears as it pursues “competition without confrontation” with the CCP regime. How quickly America reverts to full “engagement” could hinge upon how long Xi Jinping remains in office.

2. America’s continued hardline stance towards China means the CCP regime will face a “perfect storm” of domestic and external problems for a prolonged period. U.S. efforts to hold the CCP accountable over the erosion of Hong Kong’s autonomy, gross human rights violations, the coronavirus outbreak, and other abuses will sharply raise Xi Jinping’s political risks, especially with him shouldering personal responsibility for “controlling” the coronavirus and the Xinjiang policy last year.

In 2020, Xi further consolidated power and launched a rectification campaign of the political and legal affairs apparatus in preparation to push for an unprecedented third term in office at the 20th Party Congress in 2022. If Xi is successful, his factional rivals and the “anti-Xi coalition” will be either fully co-opted or eliminated. Given the “you die, I live” nature of CCP elite politics, Xi’s opponents will ruthlessly endeavor to remove or sideline him before the 20th Party Congress, and will engineer or exploit crises to achieve that outcome.

Last November, PRC scholar Di Dongsheng bragged about how the CCP has good relations with America’s “traditional elite, the political elite, the establishment,” and Wall Street, and has been “leveraging the core circle of power and influence in the United States” for decades. Most of the “guanxi” (關係) would have been built during the Jiang Zemin faction’s era of dominance (1997 to 2012), which places the bulk of pro-China U.S. elites on the Jiang faction’s side (wittingly or unwittingly) in the ongoing Xi-Jiang struggle within the CCP elite. In the lead up to the 2020 U.S. presidential election, the CCP and pro-China U.S. elites had a common enemy in President Trump. Now with Trump seemingly on his way out, the “anti-Xi coalition” inside the CCP and the pro-China U.S. elites will focus their energies on ousting Xi Jinping.

Indeed, “competition without confrontation” under a Biden administration could also mean a discriminating policy that is tough towards Xi and less so towards the Party and “Chinese leaders who want China to play a constructive role in world affairs,” in the words of a pro-China open letter to Trump and members of Congress. It should be noted, however, that the seemingly “liberal” officials of the Jiang era who oversaw the PRC’s entry to the WTO and may “want” to “play a constructive role in world affairs” are also responsible for erecting the Great Firewall of China and laying the groundwork for today’s techo-totalitarian CCP, launching the persecution of Uyghur Muslims in Xinjiang, and carrying out forced organ harvesting of prisoners of conscience, the majority of whom are Falun Gong adherents.