SinoInsight 1
The Beijing-based wife of a People’s Liberation Army serviceman told overseas Chinese language newspaper Dajiyuan that active military personnel were prevented from returning home since the outbreak of the coronavirus and from communicating with their relatives, according to an April 29 Dajiyuan report. Meanwhile, former soldiers who have been retired for over a decade recently started receiving reservist mobilization notifications from local PLA departments.
On April 30, PRC Ministry of National Defense spokesman Wu Qian announced during a press conference that the national military recruitment drive for the first half of the year would be delayed and rolled out together with the recruitment drive for the second half of the year. Typically, the PRC holds two national military recruitment drives per year, with the first drive carried out between February to March (with enlistments beginning on March 1) and second drive between August to September (enlistments begin on September 1).
Meanwhile, the PRC authorities had sent out text messages around the middle of April to encourage young people to sign up online and enlist in the military. Taiwanese businessmen working on the mainland had also received those enlistment text messages.
OUR TAKE
The Chinese economy, which was already deteriorating quickly due to the Sino-U.S. trade war, took a nosedive following the coronavirus outbreak on the mainland and the subsequent pandemic. The current economic climate has forced Chinese businesses to close, lay off workers, and freeze hiring, which in turn worsens the unemployment situation on the mainland. Meanwhile, food prices are skyrocketing amid a growing food crisis in China. All this presents a huge threat to the CCP regime.
We believe that the CCP is stepping up its military recruitment drive to alleviate at least three problems that it is facing:
Unemployment
Publicly available information indicates that the unemployment situation in China is very severe.
According to an April 24 report by the Shandong-based Zhongtai Securities, as many as 70 million people could have lost their jobs from the coronavirus pandemic. Seventy million people translates into an actual unemployment rate of around 20.5 percent.
Recent reports in overseas Chinese language media outlets note that Foxconn’s factories in Shenzhen City saw a sharp drop in overseas orders and had begun quietly laying off or furloughing workers (between two to eight months) from May 1.
Meanwhile, China will see a record 8.74 million fresh graduates in 2020, up 400,000 from 2019.
The CCP is likely hoping to resolve the unemployment problem by getting young people, and especially fresh graduates, to sign up for the military. Getting people into the military also helps to somewhat mitigate the problems brought about by a food crisis.
Social stability
Unemployment and food shortages are factors that could seriously destabilize the CCP regime. The CCP is likely anticipating and preparing for mass social unrest in the event that it cannot resuscitate the economy and resolve its crises in time. From the CCP’s perspective, one way to reduce the odds of social unrest breaking out is to recruit energetic and combative youths into the military. Once Chinese youths enlist in the PLA, they will receive indoctrination and become part of the system, not part of the problem.
Replenish the ranks
While the CCP has not released any data about how the coronavirus has affected the PLA, it is reasonable to assume that the military was not left unscathed by the epidemic. In fact, the cloistered barracks living conditions and the CCP authoritarian system are conducive for a mass outbreak of COVID-19 in the military. Assuming that accounts that military personnel are not being allowed to go home or communicate with their family members are accurate, we have reason to suspect that the PLA is covering up an outbreak of the coronavirus in military bases.
If the PLA is indeed facing a coronavirus problem, then it needs to quickly bolster its ranks so that it can prepare to suppress turmoil in China. And if the CCP is successful with its upcoming military recruitment drive, then many Chinese youths will be on the side of the suppressor in the event of mass social unrest.
SinoInsight 2
In an interview with Fox News on April 29, United States Secretary of State Mike Pompeo said that “in the end the Chinese Communist Party will ultimately be held accountable for what they did.” Pompeo’s remarks were made in the context of questions about the coronavirus and CCP disinformation.
During a press conference on April 30, a reporter asked U.S. President Donald Trump if he is considering having the U.S. not pay its debt obligation to China as “punishment for the virus.” Trump replied, “Well, I can do it differently. I can do the same thing, but even for more money just by putting on tariffs. So I don’t have to do that.”
On May 1, Trump was asked by reporters about potential tariffs on China and whether that is something that is being seriously considered. Trump replied that “we’re going to see what happens” and tariffs are “certainly an option.”
In an interview with ABC News on May 3, Secretary Pompeo said that the coronavirus pandemic was an “enormous crisis created by the fact that the Chinese Communist Party reverted to form, reverted to the kinds of disinformation, the kinds of concealment, that authoritarian regimes do.” He added, “I think the whole world is united in understanding that China brought this virus to the world.”
OUR TAKE
1. Messaging from the White House in recent weeks indicates that the Trump administration will hold the CCP accountable for the coronavirus outbreak. Now President Trump is suggesting that imposing additional tariffs on China is “certainly an option” in taking the CCP to task over the pandemic.
Trump may or may not put tariffs on Chinese products to punish the CCP for the pandemic. However, we believe that it is inevitable that Trump will eventually impose more tariffs on China as America continues to make inroads in tackling the long-term “CCP virus” problem. CCP reaction to U.S. actions, its ability to fulfill the Sino-U.S. “phase one” trade deal, and the upcoming U.S. presidential election will influence the timing of additional U.S. tariffs on Chinese goods and another escalation in the trade war.
In our China 2020 outlook, we noted that the U.S. “could threaten to impose additional tariffs on Chinese goods” and increase tariffs before the end of the year.
2. We alluded to the rise of great power competition and a “new cold war” between the U.S. and China as early as January 2018. We also laid out current and future trends in Sino-U.S. competition in our 2019 and 2020 Special Report, as well as provide a strategic evaluation of both countries and how each side would act to survive and win the “Cold War 2.0.” Businesses, investors, and governments must take into consideration the state and trends of the “new cold war” to sidestep risks, avoid being blindsided by Black Swans, and discover hidden opportunities.
