China’s Pre-EmptiveSanctions

China’s never-ending war of“zero tolerance” against pandemic outbreaks with draconian lockdowns inmega-cities, notably Shanghai and more recently Beijing, represent pathologicalefforts of achieving the unattainable objective of complete eradication.

The other perhaps conspiratorialpossibility is that, by design or default, the Chinese leadership is convenientlyusing 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 thelockdowns.

China has imposed what seemsto be a never-ending series of lockdowns in Shanghai, Beijing and othermanufacturing export dependent cities, a tactic that could be interpreted as defacto sanctions. The objective of these lockdowns is to further economically weakenthe US and western democracies to the point of triggering hyper-inflation andsubsequently stoke civil unrest in those countries.

According to severalindependent sources, China is pursuing this quixotic effort of “zero tolerance”against the re-emergence of the Covid variant with most deaths occurring primarilyamongst the unvaccinated elderly.

The potential blowback tothis tactic is the erosion of trust held by the Chinese citizenry and potentialdomestic unrest as lockdowns are becoming potential powder kegs.

Keeping Up With theUighurs

The Chinese government’sdraconian lockdown measures have created conditions for the mega-urbanresidents that are eerily similar to those of the Uighurs.

The difference is that manyof the estimated 12 million Uighurs, according to the Chinese government census,are held against their will in detention centers. Under present-day lockdowns, theHan ethnic group, which is 90% of Chinese population, are under de facto housearrest.

The difference in eachgroup’s way of life narrows considerably when a Han resident tests positive forCovid and is forcibly transferred to quarantine centers whose living conditionsare as wretched as the Uighur detention centers.

Criminal PlausibleDeniability

Instead of directly and overtlyattacking the global supply chain through cyber-attacks, I believe that theChinese leadership has craftily engineered an untraceable foreign policy tacticwith an iron-clad cloak of plausible deniability.

The new outbreak provides theperfect foil allowing for the imposition any incredulously ludicrous governmentpolicy under the name of public safety & security. Autocratic leadershipsare infamous for bragging about being the public’s protector and caretaker akinto the “benevolent dictator” - an oxymoron - and insisting that they areprotecting the public from itself.

By locking down the criticalurban manufacturing and exporting cities, they slowly and imperceptibly remove“oxygen” from the supply chain. This eventually triggers shortages andinflation across all industries, most of which, directly or indirectly, areheavily dependent on commercial and consumer products manufactured in whole or inpart in China.

The following chart entitled China’s Covid Lockdowns Hit Industrial Production provided by Investing.com and the National Bureau ofStatistics China indicate a contraction of factory output in March and April2022. Figures above 50 indicate growth while those below 50 indicatecontraction.

The figures as reported bythe Caixin Manufacturing Purchasing Managers and Manufacturing PurchasingManagers Index match the Chinese government’s renewed lockdown.

China’s World TradeDominance

A visual example of China’s sdominance 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 manufacturingaccounted for 30% of economic output while American manufacturing accounted fora mere 11% of economic output.

Asia: A Powerhouse inMaritime Trade

With respect to comparativevolumes of global shipping hubs, the following chart entitled The World’s Biggest Shipping Hubs provided by the Marine Department of Hong Kongindicates a drastic shift from 2005 to 2021 not only in volume but also in locationof shipping hubs underscoring China’s overwhelming dominance and control.

According to the report, completelynew shipping port hubs have emerged in Malaysia, Thailand and Taiwan to handlethe growing international trade from Asia.

Logistical Logjam

Chinese government mandates onlimiting manpower and work hours at the ports have gummed up the supply chainnetwork making untangling the logjam even more complicated.

The following chart entitled Shanghai Ship Jam Spells Supply Chain Trouble provided by FleetMon, an online maritime trackingservice, supports the consequences of the lockdown preventing ships fromunloading cargo with only a skeleton crew allowed to handle cargo at theworld’s largest port with the highest throughput of containers.

As indicated in the aforementionedchart of world port capacity, in 2019 Shanghai handled 47.0 million twenty-footequivalent units (TEU) containers more than three times of Europe’s largestport, Rotterdam, that handled 15.3 TEUs.

Fallout in the USA

The inability of small firms toreplenish stock could more easily bankrupt them because they typically don’thave a financial cushion for another long-term slowdown. The survivors won’t beunable to compete.

With respect to large firms,they are already reducing or closing units, consolidating others while layingoff thousands of workers. The exploding rate of inflation is an expensive butsurvivable cost for large firms but crippling for small ones.

China’s long-term shutdown couldimpact every industry to the point of initially triggering hyper-inflationfollowed by civil unrest when essential goods cannot be transported because ofdomestic logistical issues or outright shortages.

Autocratic GeopoliticalExtortion

For this reason, China’sextended port lockdowns are being conveniently used to leverage theirmanufacturing and maritime shipping dominance to extract concessions andrenegotiate deals, behind the scenes, from their clients on commercial andpolitical matters.

With Russia blocking allUkrainian agricultural products for export and China halting manufacturing andexports, it seems to add up to an autocratic economic encirclement andgeopolitical extortion with plausible deniability at its finest.

© Copyright 2022 Cerulean CouncilLLC

The Cerulean Council is aNYC-based think-tank that provides prescient, beyond-the-horizon, contrarianperspectives and risk assessments on geopolitical dynamics and global urbansecurity.