'Mother of all' #supplychain shocks looms in China's Omicron spread, MI5 issues alert on CCP infiltration in UK Parliament & China & Iran launch 25yr strategic partnership -- China Boss News 1.17.22
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'Mother of all' supply chain shocks looms in China’s Omicron spread
HSBC economists are warning that "[t]he world economy could be headed for the “mother of all” supply chain stumbles," Bloomberg reported.
Bloomberg:
That’s the warning from HSBC economists who caution that if the highly infectious omicron variant which is already swamping much of the global economy spreads across Asia, especially China, then disruption to manufacturing will be inevitable.
“Temporary, one would hope, but hugely disruptive all the same” in the next few months, they wrote in a research note this week.
Bloomberg reporters earlier noted that global shipping companies were “making a beeline for Shanghai" - the world's largest container port, to avoid delays at nearby Ningbo," because authorities there had halted all trucking after a Covid outbreak. “Ships [were] also re-routing to Xiamen in the south,” the news agency said, and the “diversions are adding to the new wave of congestion facing China’s ports.”
Bloomberg:
The influx of ships into Shanghai has delayed sailing schedules for container ships there by about a week, said freight forwarders. Those delays may then ripple outward to already backlogged gateways in U.S. and Europe, they said. Ships could start skipping Chinese ports soon due to a lack of options, according to Zencargo’s Hersham.
“The port congestion issue will continue to impact restocking cycles this quarter, alongside the omicron breakout and the impending Chinese New Year closures in China,” said Josh Brazil, vice president of supply chain insights at logistics intelligence firm project44.
At time of post, four major Chinese port cities had announced Covid outbreaks. Tianjian, Shanghai and Dalian confirmed presence of Omicron, while health authorities in Ningbo - the world’s third biggest container port - say they’re dealing with the Delta variant.
China’s capital Beijing has also reported its first locally transmitted Omicron case just as officials were preparing to receive Olympic athletes. The city has since ordered a “snap lockdown” that sealed off an entire office building in the west of the city with work colleagues of the individual who tested positive for the variant still inside.
CNN:
At an office building in China's capital on Sunday, masked Covid control personnel lugged boxes of pillows and bedding through the closely guarded entrance for white collar workers stuck inside, preparing for what may be days of lockdown as Beijing rushes to prevent the spread of Omicron ahead of the Winter Olympics.
The snap lockdown meant the building in the west of the city was sealed off without advance warning, with everybody inside unable to leave and subject to compulsory Covid testing. The decision to lock the office down came after an employee tested positive for Omicron on Saturday -- the city's first recorded case of the highly transmissible variant.
The spread of Omicron comes at an inopportune time for President Xi, who, experts say, intended to use the 2022 Winter Olympics in Beijing to demonstrate the superiority of China’s authoritarian system in dealing with Covid before an international audience. It also questions the underlying logic of his Covid-zero policy ahead of the crucial 20th Party Congress where he will seek a third term in power.
The multiplying outbreaks and their economic and social impact come at an extremely inopportune time for Xi Jinping. He had been counting on using the domestic and international platform of the 2022 Beijing Games to showcase China’s self-declared “victory over the coronavirus” and contrast it with the often stumbling and ineffective pandemic control policies in the U.S. and Europe.
…The second element of the bad timing of these widening outbreaks is its occurring in the run-up to the extremely important Chinese Communist Party’s 20th Party Congress in October, when Xi is widely expected to take the unprecedented step of assuming a third term in office, which will essentially put him on a glide path to ruler-for-life status. Part of Xi’s strength in being able to make that move is his claim to have defeated the coronavirus and protected China from the pandemic while the rest of the world burned. Now it looks quite possible that China is about to enter a period of sustained and likely uncontrollable viral spread that would rob Xi of his claim to having defeated the coronavirus.
For the rest of Bloomberg’s update, The ‘Mother of All’ Supply Shocks Lurks in China’s Covid Crackdowns, click here. For Bloomberg’s news of shipping diversions, Shipping Congestion Is Growing at World’s Biggest Port, click here.
For a list of Omicron outbreaks at time of post, see Times of India’s news, Covid-19: China outbreak reaches 6 provinces as Omicron takes hold, here. For The Guardian’s report of Beijing’s outbreak, Beijing reports its first locally transmitted Omicron variant case, click here. For Phelim Kine’s analysis of what rising infections means for President Xi politically, Medal counts, meet Covid counts, click here.
Law and International Xi
Senate introduces bill to stop defense purchases of rare earths from China by 2026
The U.S. Senate on Friday introduced a bipartisan bill that "would force defense contractors to stop buying rare earths from China by 2026 and use the Pentagon to create a permanent stockpile of the strategic minerals," Reuters reported.
Reuters:
Known as the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022, the bill would codify and make permanent the Pentagon's ongoing stockpiling of the materials. China temporarily blocked rare earth exports to Japan in 2010 and has issued vague threats it could do the same to the United States.
Although the U.S. has just one rare earths mine and lacks the capacity to process the minerals, Senator Tom Cotton, an Arkansas Republican, told Reuters that "[e]nding American dependence on China for rare earths extraction and processing is critical to building up the U.S. defense and technology sectors," and that China's emergence as leader in the production of rare earths was "simply a policy choice that the United States made."
Reuters’ analysts also noted that “most members of the nascent U.S. rare earths sector praised the bill,” saying "policies such as this one get us closer to the target of onshoring the critical supply chain."
For the rest of Reuters’ update, EXCLUSIVE U.S. bill would block defense contractors from using Chinese rare earths, click here.
MI5 issues public alert to Chinese agent infiltration in UK Parliament
Britain's MI5 "has issued a a rare warning that an alleged Chinese agent has infiltrated Parliament to interfere in UK politics," the BBC reported.
BBC:
An alert from the security service said Christine Ching Kui Lee "established links" for the Chinese Communist Party (CCP) with current and aspiring MPs.
She then gave donations to politicians, with funding coming from foreign nationals in China and Hong Kong.
It comes after a "significant, long-running" investigation by MI5, Whitehall sources told the BBC.
One of the MPs funded by Ms Lee was Labour's Barry Gardiner, who received over £420,000 from her in five years - but he said he had always made the security services aware of the donations.
Liberal Democrat leader Sir Ed Davey also received a £5,000 donation when he was energy secretary - but he said the money was accepted by his local association and it was "the first time he has been given cause to be concerned".
Security correspondent Gordon Corera said that MI5's public alert was "unusual," and "signals that their long-running investigation had led them to become sufficiently concerned that they felt they had to act now."
Corera, BBC:
The allegation here is interference - covertly gaining influence - and not espionage (stealing secrets).
And one concern from security officials is that there are not the laws in place to be able to tackle interference.
As a result, they sometimes believe that going public - as they have done in this case - is the best way of disrupting any ongoing risk.
For the rest of the BBC’s update, MI5 warning over 'Chinese agent' in Parliament, click here.
Satellite images show China accelerating settlements along disputed Bhutan border
Satellite imagery reveals that "China has accelerated settlement-building along its disputed border with Bhutan, with more than 200 structures, including two-storey buildings, under construction in six locations," Reuters has reported.
Reuters:
Construction-related activity in some of the locations along Bhutan's western border has been under way since early 2020, with China initially building tracks and clearing out areas, based on material provided by satellite imagery firms Capella Space and Planet Labs, said Chris Biggers, the mission applications director at HawkEye 360.
Images show the work speeded up in 2021. Smaller structures were erected - possibly to house equipment and supplies - followed by the laying of foundations and then the construction of buildings, Biggers said.
"To me, 2021 was the period for acceleration," Biggers said.
Two other experts who studied the locations of the new construction and recent satellite images taken by Capella Space said all six settlements appear to be in territory disputed by China and Bhutan - including a contested tract of roughly 110 square kilometres - with little in the way of resources or native population.
The locations are believed to be of strategic value to China, allowing it “to better control and monitor far-flung areas, and potentially use them to establish security-focused installations near the junction of the borders of India, Bhutan and China, where Indian and Chinese troops were locked in standoff for more than two months in 2017,” analysts told Reuters.
“Control over the remote Doklam plateau would potentially give China greater access to the adjoining ‘Chicken's Neck’ area, a strategic strip of land that connects India to its northeastern region,” they said.
For the rest of Reuters’ report, China steps up construction along disputed Bhutan border, satellite images show, click here.
Geopolitics
China and Iran launch 25-year “strategic partnership”
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