China’s Geopolitical Extortion
China’s Pre-Emptive Sanctions
China’s never-ending war of “zero tolerance” against pandemic outbreaks with draconian lockdowns in mega-cities, notably Shanghai and more recently Beijing, represent pathological efforts of achieving the unattainable objective of complete eradication.
The other perhaps conspiratorial possibility is that, by design or default, the Chinese leadership is conveniently using the outbreak as a stealth foreign tool in the form of present-day (pre-emptive) sanctions against the US and western economies by unnecessarily extending the lockdowns.
China has imposed what seems to be a never-ending series of lockdowns in Shanghai, Beijing and other manufacturing export dependent cities, a tactic that could be interpreted as de facto sanctions. The objective of these lockdowns is to further economically weaken the US and western democracies to the point of triggering hyper-inflation and subsequently stoke civil unrest in those countries.
According to several independent sources, China is pursuing this quixotic effort of “zero tolerance” against the re-emergence of the Covid variant with most deaths occurring primarily amongst the unvaccinated elderly.
The potential blowback to this tactic is the erosion of trust held by the Chinese citizenry and potential domestic unrest as lockdowns are becoming potential powder kegs.
Keeping Up With the Uighurs
The Chinese government’s draconian lockdown measures have created conditions for the mega-urban residents that are eerily similar to those of the Uighurs.
The difference is that many of the estimated 12 million Uighurs, according to the Chinese government census, are held against their will in detention centers. Under present-day lockdowns, the Han ethnic group, which is 90% of Chinese population, are under de facto house arrest.
The difference in each group’s way of life narrows considerably when a Han resident tests positive for Covid and is forcibly transferred to quarantine centers whose living conditions are as wretched as the Uighur detention centers.
Criminal Plausible Deniability
Instead of directly and overtly attacking the global supply chain through cyber-attacks, I believe that the Chinese leadership has craftily engineered an untraceable foreign policy tactic with an iron-clad cloak of plausible deniability.
The new outbreak provides the perfect foil allowing for the imposition any incredulously ludicrous government policy under the name of public safety & security. Autocratic leaderships are infamous for bragging about being the public’s protector and caretaker akin to the “benevolent dictator” - an oxymoron - and insisting that they are protecting the public from itself.
By locking down the critical urban manufacturing and exporting cities, they slowly and imperceptibly remove “oxygen” from the supply chain. This eventually triggers shortages and inflation across all industries, most of which, directly or indirectly, are heavily dependent on commercial and consumer products manufactured in whole or in part in China.
The following chart entitled China’s Covid Lockdowns Hit Industrial Production provided by Investing.com and the National Bureau of Statistics China indicate a contraction of factory output in March and April 2022. Figures above 50 indicate growth while those below 50 indicate contraction.
The figures as reported by the Caixin Manufacturing Purchasing Managers and Manufacturing Purchasing Managers Index match the Chinese government’s renewed lockdown.
China’s World Trade Dominance
A visual example of China’s s dominance in world manufacturing is presented in the following chart entitled China is the World’s Manufacturing Superpower provided by the United Nations Statistics Division.
According to the report, China surpassed the US in manufacturing in 2010. In 2019 China’s manufacturing accounted for 30% of economic output while American manufacturing accounted for a mere 11% of economic output.
Asia: A Powerhouse in Maritime Trade
With respect to comparative volumes of global shipping hubs, the following chart entitled The World’s Biggest Shipping Hubs provided by the Marine Department of Hong Kong indicates a drastic shift from 2005 to 2021 not only in volume but also in location of shipping hubs underscoring China’s overwhelming dominance and control.
According to the report, completely new shipping port hubs have emerged in Malaysia, Thailand and Taiwan to handle the growing international trade from Asia.
Chinese government mandates on limiting manpower and work hours at the ports have gummed up the supply chain network making untangling the logjam even more complicated.
The following chart entitled Shanghai Ship Jam Spells Supply Chain Trouble provided by FleetMon, an online maritime tracking service, supports the consequences of the lockdown preventing ships from unloading cargo with only a skeleton crew allowed to handle cargo at the world’s largest port with the highest throughput of containers.
As indicated in the aforementioned chart of world port capacity, in 2019 Shanghai handled 47.0 million twenty-foot equivalent units (TEU) containers more than three times of Europe’s largest port, Rotterdam, that handled 15.3 TEUs.
Fallout in the USA
The inability of small firms to replenish stock could more easily bankrupt them because they typically don’t have a financial cushion for another long-term slowdown. The survivors won’t be unable to compete.
With respect to large firms, they are already reducing or closing units, consolidating others while laying off thousands of workers. The exploding rate of inflation is an expensive but survivable cost for large firms but crippling for small ones.
China’s long-term shutdown could impact every industry to the point of initially triggering hyper-inflation followed by civil unrest when essential goods cannot be transported because of domestic logistical issues or outright shortages.
Autocratic Geopolitical Extortion
For this reason, China’s extended port lockdowns are being conveniently used to leverage their manufacturing and maritime shipping dominance to extract concessions and renegotiate deals, behind the scenes, from their clients on commercial and political matters.
With Russia blocking all Ukrainian agricultural products for export and China halting manufacturing and exports, it seems to add up to an autocratic economic encirclement and geopolitical extortion with plausible deniability at its finest.
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The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security.