SinoInsight 1
On April 10, Party mouthpiece Global Times published an opinion piece titled, “As the World Heads for Troubled Times, Taiwan Shouldn’t Be Too Antagonistic” (世界進入多事之秋，台當局須悠著點). The piece made the following points:
- The piece criticized Taiwan foreign minister Joseph Wu for his remarks contrasting the authoritarian PRC and the democratic ROC’s response to the Wuhan coronavirus at the Hudson Institute on April 9. Wu had said, “If anyone asks me about the difference between the Taiwan model and a Chinese communist model in fighting against COVID-19 I will say the most important factor is transparency and honesty. We in Taiwan cannot afford to conceal or to lie, but the Chinese communists are institutionally incapable of telling the truth.” He also said, “Whatever China has tried to do, Taiwan’s experience shows that for free and open democracies there is a better path forward in dealing with the outbreak. Further, Wu said, “The most dangerous narrative to arise out of this global pandemic seems to me are the talking points China is pushing around the world, that only authoritarian regimes have the resources and capabilities to deal with the problem … Taiwan is a counterweight to this narrative.”
- The piece accused Taiwan of attacking World Health Organization director-general Tedros Adhanom Ghebreyesus under instructions from the United States.
- The piece warned Taiwan not to “take advantage” of the pandemic to worsen Sino-U.S. tensions and “genuinely endanger” Taiwan.
- The piece concluded with the phrase, “Don’t say you haven’t been forewarned” (勿謂言之不預). The phrase is a classic PRC threat that implies that the PRC is prepared to escalate action against the party that it is threatening, including the use of military force. Historically, the PRC used the phrase before border clashes with India in 1962, the Sino-Soviet border conflict in 1969, and the Sino-Vietnamese war in 1979. In recent years, the PRC used the phrase to caution the U.S. against escalating the trade war, to threaten Canada over its arrest of Huawei CFO Meng Wanzhou, and to show anger towards the U.S. for passing the Hong Kong Human Rights and Democracy Act of 2019.
Also on April 10, six People’s Liberation Army Air Force aircraft flew from the coast of China to the Bashi Channel south of Taiwan into the Pacific Ocean to carry out a long-range training mission. The six aircraft included a Xian H6 strategic bomber, a KJ-500 early warning and control aircraft, and F-11 fighters.
On April 11, the PRC aircraft carrier Liaoning and five accompanying warships passed through the Miyako Strait to the northeast of Taiwan, according to Taiwan’s defense ministry. On April 12, the carrier group sailed in waters on Taiwan’s east coast and then carried out exercises in the seas to the south of Taiwan.
Around the same period, the U.S. carried out military maneuvers near Taiwan in what appeared to be a response to increased PRC activity in the region. On April 10, a U.S. RC-135U Combat Sent surveillance aircraft was spotted flying over the South China Sea, while the U.S. Navy guided-missile destroyer USS Barry sailed through the Taiwan Strait “in support of security and stability in the Indo-Pacific region,” according to a statement on the U.S. Pacific Fleet Facebook page. On April 11 and April 12, U.S. Navy EP-3E Aries electronic reconnaissance aircraft were seen flying south of Taiwan.
OUR TAKE
1. We predicted in our China 2020 outlook that the PRC could mobilize its aircraft carriers in military exercises aimed at menacing Taiwan. The maneuvers of the aircraft carrier Liaoning on April 11 and April 12 verify our prediction.
2. There are two likely reasons why the PRC recently stepped up efforts to menace Taiwan. First, the PRC is paving the way to launch a Fourth Taiwan Strait Crisis (likely in May; see here and here). Second, the CCP feels threatened by Taiwan’s success in dealing with the coronavirus and its bolstered international reputation, as well as the failure of the PRC’s “mask diplomacy” (see the next point).
3. In late February, we noted that the CCP would seek to capitalize on a coronavirus pandemic to further its world domination agenda. The PRC’s “mask diplomacy” in March and propaganda efforts touting the success of its authoritarian model in dealing with COVID-19 have affirmed our analysis.
The PRC’s “mask diplomacy,” however, has run into trouble of late:
- The PRC narrative of “generosity” and its authoritarian model has been debunked by international reporting and counterpropaganda efforts by the U.S. and its allies. Members of the Trump administration have called on the PRC to be more transparent in disclosing its coronavirus data and allow international investigations into the coronavirus’s origins. Media reports have highlighted the issue of defective Chinese equipment and how the PRC has attempted to pass off sales of masks to other countries as “donations.” Recently, there has even been attention given to how the PRC had been buying up masks and other protective gear in large quantities from other countries, and thus denying those countries crucial supplies during the “CCP virus” pandemic. Australian media reported that China imported over 2 billion masks and other protective equipment from Australia and other places overseas between January and February. White House trade advisor Peter Navarro also said in an interview that “China was basically attempting to corner the market in personal protective equipment,” including buying 2.2 billion masks from elsewhere.
- Many in the international community have begun scrutinizing and exposing the close relationship and cooperation between the PRC and the World Health Organization. Some are calling for both parties to be held accountable for the pandemic due to their COVID-19 response.
- Recently, there has been renewed attention on the origins of the coronavirus, including the possibility that it was bioengineered as part of a CCP bioweapons project and could have escaped from a laboratory.
- As calls for the PRC to be held accountable for the pandemic are on the rise, the success of Taiwan in dealing with the coronavirus and its own “mask diplomacy” are receiving greater international acclaim. The U.S. has praised the “Taiwan model” and U.S. Secretary of State Mike Pompeo hailed Taiwan as a “real friend” for donating 2 million masks to America. “Your openness and generosity in the global battle against COVID-19 is a model for the world,” Pompeo wrote in a tweet. Microsoft founder Bill Gates described Taiwan’s handling of the coronavirus epidemic as “exemplary.” Meanwhile, 127 prominent European politicians recently signed petitions praising Taiwan’s coronavirus efforts and expressing support for Taiwan’s entry into the WHO.
4. The Taiwan model represents a legitimate ideological and existential threat to the PRC. Taiwan has shown that it is possible for a Chinese majority territory to be democratic, transparent, generous, and successful in dealing with an epidemic that most of the world has trouble handling. Conversely, the PRC and its draconian measures have been much less effective in curbing the coronavirus, and its authoritarian system facilitated the spread of the virus early on and triggered a pandemic.
The clear contrast between Taiwan and the PRC bodes ill for the CCP in a post-pandemic world. The CCP stands to lose global relevance and influence with countries shifting their supply chains out of China and the “superiority” of the PRC’s authoritarian model being debunked by the success of Taiwan during the pandemic.
SinoInsight 2
The lifting of the lockdown in Wuhan, the epicenter of the coronavirus, and the gradual resumption of work across China seem to suggest that the CCP regime had “turned a corner” just as the rest of the world is still struggling with the pandemic.
Publicly available information, however, reveals that the CCP is not only not out of the woods with regard to the coronavirus, but still has a whole host of crises to deal with.
Epidemic situation
April 4
The Sichuan provincial government’s coronavirus epidemic emergency response office issued a document to town and district authorities requesting that they proceed with the construction of new centralized quarantine facilities across the province. A total of 52,000 centralized quarantine facilities are expected to be constructed, with 10,000 to be built in Sichuan’s capital city of Chengdu. The document, which was recently circulated on Chinese social media, requested that the various local epidemic emergency response offices respond to the Sichuan office’s instructions by April 6.
April 5
Xu Hejian, the deputy chief of the Beijing municipal government’s propaganda department, said during a press conference that it is “impossible” to curb the epidemic in the short-term and that “epidemic prevention and control in Beijing will very likely become a long-term normal.”
April 6
A Guangdong bureau-level official told SinoInsider that the epidemic situation was not under control in China and that the lifting of the lockdown in Wuhan would greatly increase the risk of the coronavirus spreading. The official advised people not to leave their homes as much as possible.
April 7
According to a recording of a conversation that was widely circulated on Chinese social media, a female volunteer worker in Wuhan said that a medical team from Shanghai had warned her before leaving Wuhan that the epidemic situation in the city was “more dangerous” than before the lockdown and advised her not to take public transportation.
April 8 – April 12
- According to videos on Chinese social media, several local communities in Wuhan reinstituted lockdowns on April 9 after the authorities lifted the city-wide lockdown on April 8 due to a recurrence of the coronavirus:
- The Hanhua Garden community was placed under lockdown. Videos showed community staff driving people away from the entrance of the community and shouting that no one should leave the community.
- A confirmed case of COVID-19 was discovered at an agricultural byproducts market in Wuhan’s Jiangxia District.
- Jianghan Road, a famous commercial district in Wuhan, was placed under lockdown during evenings.
April 9
The authorities in Hongwan Community in Nanchang City, Jiangxi Province, issued a notice about a girl in the community who tested positive for coronavirus.
April 11
In a notice, the Beijing municipal authorities made it mandatory for people outside Beijing who wish to stay in hotels in the city to show medical proof that they have tested negative for the coronavirus and have received a “no abnormalities” health code from either the national or Beijing health authorities. Additionally, people outside Beijing need to register their contact person in the city with the hotel and “accept” the hotel’s management of their health. This ruling was set to take effect from April 12.
Unemployment situation
Many Chinese citizens have recently taken to social media to share stories about being fired or “furloughed” by companies. Some have also shared how difficult it is to get a job now.
April 8
Zhuhai Jianghao Electronics Co. Ltd. and other small and medium-sized enterprises announced to their employees that they would be going “on vacation” from April 20, 2020 to Oct. 8, 2020.
April 10
According to information circulating on Chinese social media, Haier Group Co. and Hisense Co. Ltd., two big Chinese electronics companies, had recently carried out large-scale layoffs. Layoffs at Hisense were reportedly in the 10,000 employee range.
The Qingdao State-owned Assets Supervision owns a controlling stake in Hisense, and Hisense owns two publicly-listed companies.
April 11
A woman from Hubei Province who traveled to Guangzhou City for work said in a video that Guangzhou’s streets (she could have been referring to areas near small manufacturing plants) were full of people looking for employment, but hardly anyone found a job. She advised others against looking for work in Guangzhou.
April 12
Hisense issued a statement admitting that its domestic and international sales saw sharp declines due to the coronavirus, and that international sales account for 40 percent of its total revenue. The statement added that the company’s executives are taking pay cuts and that underperforming employees will be let go. The statement, however, denied that there were large-scale layoffs.
On the same day, Haier also issued a statement denying mass layoffs at the company.
Social unrest
April 9
Dozens of merchants along Guanggu Pedestrian Street in Wuhan held a protest march demanding that local landlords not collect rent from them for a year (免租一年), according to videos circulating on Chinese social media. Wuhan’s Guanggu Pedestrian Street is a popular shopping, food, and tourist district.
April 10
In the evening, residents living near Changgang Station in the Haizhu District, Guangzhou City blocked up roads with debris to protest a management company for turning a closed housing estate into an open community after carrying out demolition work to build a new clothing wholesale market.
Natural disasters
April 9 – April 10
Several areas in the provinces of Henan, Hebei, Shanxi, Shandong, and elsewhere are experiencing heavy snowfall and sharp drops in temperature. The sudden temperature change and snow pileup destroyed crops in some areas.
April 10
According to mainland news reports, a fire broke out in a factory building that manufactures solar cells in Qidong City, Jiangsu Province. The factory belongs to Hanwha Q Cells, one of the top ten commercial enterprises in South Korea and the third-largest solar cell manufacturer in the world.
April 11
A fire broke out in the Guanghao Machinery Technology plant in Shaoxing City, Zhejiang Province, according to mainland media reports. Guanghao Machinery Technology is reportedly one of the largest wool-blend sweater manufacturers in China.
OUR TAKE
1. The PRC does not have the coronavirus epidemic under control. This is especially clear from the Beijing municipal government’s assessment that epidemic prevention and control will become a “long-term normal” and the implementation of localized lockdowns in Wuhan. We believe that the odds of a second wave of infections breaking out in China are high.
2. The CCP is rushing people back to work to avoid economic collapse and ensure regime survival. Reopening factories, however, does not do much to revive the Chinese economy when global consumption and demand are down due to the pandemic. Without orders, companies are forced to fire or furlough people, causing a worsening of the unemployment situation in the Chinese regime and a further weakening of the Chinese economy as domestic consumption goes down.
The firing or furloughing of employees at big Chinese companies in recent days was foreshadowed by similar moves by SMEs near the end of March.
3. There is a possibility that the breaking out of fires in factories across mainland China are not all accidental. Companies have come under heavy pressure during the epidemic due to a lack of orders and shutdowns. Worse, local governments have forced companies to keep their factories “running” without workers, but having the machines and lights on all day to keep electricity consumption up to “show” the central government that the regular resumption of production and work is in order.
With companies bleeding money and going into debt, it would be easier for them to work with insurance companies and banks to cut losses and even wipe debt should their factories be burned down in an “accidental” blaze.
4. Frost and snow in spring would affect harvests in the latter half of the year and worsen China’s food crisis.
5. Businesses, investors, and governments must remain skeptical of “promising” signs that China has “turned the corner” in the epidemic, and take action to cope with rising political risks in the PRC.
