SinoInsight 1
On Sept. 25, Xi visited Heilongjiang’s Jiansanjiang, an important agricultural development in China. State newspapers ran photos of Xi Jinping standing in wheat fields and surveying a “bumper harvest.”
On Sept. 16, Xinhua ran an article on the autumn harvest with the words “bumper harvest” in the headline. The article claims that while summer grain harvest fell by 2.2 percent this year, it did not affect the “bumper crop.” The article also claims that the crop yield in 2018 was one of the highest on historical record.
OUR TAKE
A quarter of China’s total grain output comes from the summer harvest, while the autumn harvest comprises the remaining three quarters. According to data from China’s National Grain Trade Center (as of Sept. 15), wheat purchases fell 32.39 percent from a year ago; indica rice fell 12.61 percent year-on-year; and rapeseed fell 10.85 from 2017.
Based on our research, the increase in grain purchases suddenly reversed near the start of the year when it seemed like there was going to be a trade war between the U.S. and China. This phenomenon is the result of the CCP food distribution system’s long-term habit of faking data and other behavior like importing cheap food and passing it off as domestic harvest to defraud grain inspectors. With the onset of a trade war, food imports would become more costly, and Chinese officials can no longer profit from their usual tricks.
The CCP’s recent “bumper harvest” propaganda stunt is a deliberate attempt to hide the fact that the summer harvest had shrunk by nearly 30 percent. This propaganda move could lead to a food crisis in China and trigger a Black Swan event.
SinoInsight 2
In January, we observed that President Donald Trump is “playing a strategic chess match” against China. The opening saw the declaration of China as a “strategic competitor,” high-level warnings about China’s greater, long-term threat to U.S. national security, and the start of a Sino-U.S. trade war.
During the period of the United Nations General Assembly in September, the chess match entered the middlegame.
On Sept. 21, the U.S. imposed tough sanctions on the People’s Liberation Army’s equipment development department and its director for purchasing Russian military equipment, drawing huge protestations from the Chinese regime.
Speaking to Fox News on Sept. 23, U.S. Secretary of State Mike Pompeo said: “The trade war by China against the United States has been going on for years. Here’s what’s different in this administration: to the extent one wants to call this a trade war, we are determined to win it.”
In a speech to the UN General Assembly on Sept. 24, Trump called out China’s trade abuses since the country joined the World Trade Organization, and declared that China’s “market distortions and the way they deal cannot be tolerated.” And Trump again criticized communism and socialism as per his previous UN speech last year, but this time with an added call to action. “All nations of the world should resist socialism and the misery that it brings to everyone,” he said. Trump used Venezuela as an example, but the largest socialist country in the world today is China.
Later at the UN Security Council session, Trump said that China was attempting to interfere in the U.S. midterm elections against his administration. “They do not want me—or us—to win because I am the first president ever to challenge China on trade,” he said.
The CCP issued a textbook denial to Trump’s charges of election meddling. But the CCP would undoubtedly have gotten Trump’s message: The U.S. counteroffensive in the CCP-launched “Cold War” is on.
OUR TAKE
The release of Trump’s National Security Strategy in December 2017 was a watershed moment in Sino-U.S. relations. Trump’s statements on China at the UN marks yet another phase. We believe that our analysis this January still holds true: Trump is “aiming for an endgame that could potentially surpass Ronald Reagan’s most significant foreign policy accomplishment.”
