SinoInsight 1
Recently, Zhejiang, Hunan, Inner Mongolia, Jiangxi, and other provinces issued notices concerning power restrictions and suspension of production.
According to mainland media reports, the power restrictions are due to limited power supply. The type of restriction enforced differs from place to place, but the affected areas have carried out some or most of the following:
- All small businesses are required to cease operations to conserve power.
- Medium to large enterprises are required to cut energy consumption or shut down production on several days each week.
- Partial or total shutdown of street lights in some areas.
- Offices are required to turn off air-conditioning, heating equipment, and elevators. Some people have complained about needing to climb the stairs in office buildings with 20 to 30 floors.
- Power is cut to some hospitals and medical equipment is rendered inoperable.
- Local governments send out enforcement teams to ensure that people are not violating power conservation restrictions.
Meanwhile, many export-oriented companies and factories have been complaining that they cannot meet overseas orders, which have increased per seasonal demand, due to power cuts. The power restrictions are also affecting logistics, resulting in a delivery backlog.
On Dec. 14, the PRC’s National Energy Administration released data showing that China consumed 646.7 billion kilowatt hours of electricity in November, up 9.4 percent from a year ago. The NEA also said that power shortages are the result of “electricity development and the scaling back of coal production as part of the 13th Five-Year Plan,” as well as the increase in winter heating demand, “among other reasons.”
OUR TAKE
1. China’s power shortages are almost certainly linked with the CCP’s recent effort to block Australian coal imports back in mid-October.
According to a Nov. 24 Bloomberg News report, there were 66 ships with Australian coal waiting to unload in Chinese waters. Of the 66 ships, 53 had been waiting four weeks or longer to discharge their cargo. Thirty-nine of the ships were carrying about 4.1 million tons of metallurgical coal and nine were carrying about 1.1 million tons of thermal coal.
China imports coal mainly from Australia, Indonesia, Mongolia and Russia, according to financial service provider Wind. In 2019, China imported the most coal from Australia (76.95 million tons), or 39 percent of total coal imports (not including lower grade coal imports). Fifty-nine percent of imported Australian coal is suitable for power needs and 40 percent is steel production-grade coal.
In recent years, many power plants along the coastal regions in China switched to coal-burning machines tailored for higher grade coal due to the low price and high quality of imported Australian coal. After the CCP blocked Australian coal imports, however, these coastal power plants have no choice but to use lower grade Indonesian and Russian coal, resulting in higher costs and inefficiencies. The higher costs are bad news for the Chinese people and businesses, who are used to lower electricity prices stemming from the CCP’s policy to curb prices by 5 percent over the past two years.
All in all, the CCP’s move to block Australian coal for propaganda and geopolitical purposes is backfiring. In the past decade, China had been able to generate power sufficiently, if not in excess. Now at a time when the Chinese economy is searching for a speedy recovery, businesses are being hit by power cuts and shutdowns.
2. The CCP likely presumed that its sanctions against Australian and other intimidation efforts would force the latter to cave before the winter, particularly in light of Australia’s dependency on exporting to China. Beijing is also likely betting that its efforts to make an example of Australia will dissuade other countries from joining the U.S.-led global anti-CCP bloc. However, the CCP’s bullying of Australia is clearly backfiring, as we previously noted.
This is not the first time that the CCP has misjudged the situation and is reaping the “rewards” of its effort to win the great power competition with the United States. Back in 2018, the CCP imported pork from Russia as part of a response to U.S. trade sanctions, but also ended up “importing” an African swine fever epidemic from tainted Russian pork. Meanwhile, Brazil and Argentina sold soybeans to China at high prices and imported cheap U.S. soybeans to make up domestic supply. By 2020, the PRC was importing large quantities of pork, soybeans, and corn from the U.S. as part of the Sino-U.S. “phase one” trade deal and to stabilize food prices back home. Ultimately, the CCP’s effort to counter U.S. trade sanctions backfired badly, and we might be seeing recent history repeat itself as the Party takes on Australia.
3. There are two main reasons why the CCP will likely stick with its intimidation of Australia despite recent setbacks.
First, the CCP adheres to Marxism-Leninism, an ideology that tolerates sacrificing the people’s interests if it means saving the Party’s “face”; as Lenin is alleged to have said, “the ends justify the means.” During the height of the Great Leap Forward, the CCP exported large quantities of food for propaganda and geopolitical reasons while the Chinese people died en masse as a result of a great famine.
Second, CCP officials are inclined to “prefer left rather than right” (寧左勿右) and meet their performance targets, even if it means that overall regime interests are sacrificed. Local officials and those in the ministries will strive to be “politically correct” first and leave the mess from their actions for Xi Jinping and Party Central to clean up.
Xi and the CCP are likely sticking with “wolf warrior” diplomacy in the face of setbacks because they are gambling on “competition without confrontation” with the U.S. under a Biden presidency. But if Donald Trump, and not Joe Biden, is President come Inauguration Day, Sino-U.S. tensions will escalate rapidly and the Chinese economy will see sharp shocks, endangering the CCP regime.
SinoInsight 2
Dec. 14
1. Electoral college delegations met separately in their respective states to cast votes for the President and Vice President. Republican electors in seven states—Pennsylvania, Georgia, Michigan, Wisconsin, Arizona, Nevada, and New Mexico—cast an alternative set of votes for Trump.
Legacy media outlets, however, barely reported this development.
2. In the first sentence of a resignation letter to President Donald Trump, U.S. Attorney General William Barr wrote, “I appreciate the opportunity to update you this afternoon on the Department’s review of voter fraud allegations in the 2020 election and how these allegations will continue to be pursued.”
3. Per the findings of a preliminary forensic report of Dominion voting systems in Michigan’s Antrim County, both the ballot-adjudication logs and the security logs for the Nov. 3 election appear to have been removed, but logs for prior elections are still on the machines. Also, the Dominion machines sent an extraordinary number of ballots for adjudication, or an error rate of 68.05 percent; the Federal Election Commission only allows for an error rate of 0.0008 percent.
Dec. 16
1. The Office of the Director of National Intelligence issued a statement that the DNI “will not meet the December 18 deadline, set by Executive Order and Congress to submit the IC’s classified assessment on foreign threats to the 2020 U.S. elections” because it “received relevant reporting since the election and a number of agencies have not finished coordinating on the product.”
According to various media reports, John Ratcliffe does not want to sign off on the report if it did not accurately reflect the CCP’s attempts to influence the 2020 election. Despite adequate raw intelligence (some of it in Mandarin) about the CCP’s election-related intentions and actions before and after the election, including social media campaigns amplifying messages that Trump is a “white supremacist,” some senior career intelligence analysts do not want to include a China section in the foreign threats report. Meanwhile, others say that “new intelligence will show that China’s effort to influence the U.S. election was far more extensive than previously reported by spy agencies over the last year,” according to Bloomberg News.
A senior national security official told Breitbart News, “This appears to be a textbook case of intelligence being politicized by a handful of careerists in the bowels of the CIA. They don’t want to give Trump the talking points that China was engaged in election influence operations, but we all know they were.”
2. A federal judge in Massachusetts issued an order on an election fraud case favorable to the plaintiff, Dr. Shiva Ayyadurai. Dr. Shiva filed a complaint on Nov. 20 against Massachusetts Secretary of State William Galvin alleging fraud during the 2020 Massachusetts Republican primacy and to prevent the state from certifying the Nov. 3 general election results.
While Dr. Shiva’s case contained procedural defects, the judge, Mark L. Wolf, gave Dr. Shiva a chance to amend his complaint. Judge Wolf also ruled that the Massachusetts government’s argument that Dr. Shiva’s case is moot because the election results have already been certified does not hold because the court “could still grant injunctive relief decertifying the election if exceptional circumstances require it.”
OUR TAKE
1. Back in November, we warned of two distinct 2020 U.S. presidential election information silos. We also warned that “a Trump victory will come as a Black Swan event for those who derive information solely from one silo while shunning the other.”
President Trump still has valid legal and constitutional paths to victory even though the electoral college delegations have cast their votes. Also, the DNI report on foreign election threats could impact the outcome of the 2020 U.S. presidential election when it is finally submitted to Trump and members of his cabinet. At the very least, the inclusion of intelligence about the CCP’s election influence efforts will very likely prompt the Trump administration to sanction the PRC, possibly before the year out or in the first two months of 2021 if the report is delivered in the next couple of days.
The result of the 2020 U.S. presidential election is not a foregone conclusion, despite what is being reported by legacy media. Depending on how the incidents we listed above play out, Trump could be re-elected in January 2021. We estimate Trump’s chances of reversing the Nov. 7 result at over 50 percent based on currently available public information.
2. We also warned in August that the CCP will “double down on the ‘racism’ card that it has thus far remained content to play subtly.” Our analysis has been partially affirmed by news reports claiming that the U.S. intelligence community found “social media campaigns amplifying messages that Trump is a ‘white supremacist.’”
To effectively counter the CCP’s “racism” card, the Trump administration should bolster the “culture” component of its strategic approach to the PRC. We wrote that “a ‘culture strategy’ could prove instrumental in neutralizing the CCP’s ideological countermeasures, inoculating the general public against the Party’s malicious propaganda, and rolling back the CCP’s corrupting influence in America and around the world.”
