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The CIA on Thursday confirmed it has established a new ‘mission center’ focused on China after a major review that had been ordered earlier in the year by CIA Director Bill Burns.

A new statement issued by Director Burns said the new China Mission Center “will further strengthen our collective work on the most important geopolitical threat we face in the 21st century, an increasingly adversarial Chinese government.”

It comes amid criticisms that China is ultimately “out-spying” the United States, also amid tit-for-tat cyber intrusion accusations which have gone on for years. A separate report out this week in The New York Times also indicates US intelligence officials are increasingly worried that China is among a handful of nations increasingly arresting, executing, or oftentimes compromising US agents abroad. 

The China center will have a more narrowly focused mandate on China-related intelligence matters, which would include vaster resources. – rather than intelligence on China being collected under the prior aegis of the much larger “Mission Center for East Asia and Pacific”.

“Mission center are stand-alone entities that utilize resources from across the CIA in line with agency priorities,” noted a prior Bloomberg report. Apparently an entire mission center for China has for years been under discussion, but with no director or prior administration willing to order its establishment, likely on fears it would trigger Cold War-style escalation and tit-for-tat covert ops.

The Thursday CIA announcement also revealed further restructuring of internal departments as follows: 

At the same time, two other traditionally high-priority areas will no longer be standalone but rather part of their regions: The Iran and Korea mission centers will be folded into the Near East Mission Center and the East Asia and Pacific center, respectively.

And more, via CNN:

Other adjustments included a new Transnational and Technology Mission Center and a chief technology officer position. This second mission center will focus on issues “critical to US global competitiveness,” a senior CIA official said, including global health, economic security, climate change and technology.

The last major mission center to be established prior to this major rearranging, the Korea Mission Center, was under Trump in 2017 at a moment the White House was trying to assess the north’s nuclear capabilities and how to confront Pyongyang.

Chinese leaders are sure to see this latest internal move is as part of broader escalation in tensions, and will likely mirror US intelligence efforts, particularly given that in recent months China has charged the CIA specifically with hacking Beijing for over a decade. 

Authored by Jake Johnson via CommonDreams.org,

Moderna’s pledge Thursday to build a coronavirus vaccine factory in a yet-to-be-determined location in Africa at some unspecified point in the future was met with immediate skepticism from public health campaigners and analysts, who warned that the U.S.-based company’s new announcement may be nothing more than a “PR gimmick.”

That was the initial assessment offered by Médecins Sans Frontières (MSF) Access Campaign communications director Shailly Gupta, who argued that Moderna’s statement could be designed “to derail/stall discussions” on a patent waiver for coronavirus vaccines and “divert focus” from the World Health Organization’s mRNA technology transfer initiative in South Africa.

Moderna has thus far refused to participate in the WHO’s effort, which is intended to rapidly scale up vaccine production on the continent. Dr. Martin Friede, a vaccine research coordinator at the WHO, said last month that “all attempts” to get Moderna to take part in the organization’s tech transfer hub “have resulted in no reply.”

In a press release Thursday, Moderna said it intends to “build a state-of-the-art mRNA facility in Africa with the goal of producing up to 500 million doses of vaccines each year,” including its two-dose coronavirus shot—which was developed with the help of billions of dollars in funding from the U.S. government.

“On behalf of our growing team, partners, and shareholders, we are determined to extend Moderna’s societal impact through the investment in a state-of-the-art mRNA manufacturing facility in Africa,” said Moderna’s billionaire CEO Stéphane Bancel, who offered no specifics on when or where the proposed facility will be built. Dr. John Nkengasong, director of the Africa Centres for Disease Control and Prevention, told Reuters on Thursday that Moderna did not consult with him before making its announcement.

The Massachusetts-based pharmaceutical company’s statement came as it continues to draw criticism for selling the overwhelming majority of its vaccine supply to rich nations while refusing to share doses or key technology with struggling poor countries. To date, according to Nkengasong, just 4.5% of Africa’s 1.3 billion-strong population has been fully vaccinated against Covid-19.

“Pledging to build a plant in the future cannot excuse Moderna’s failure to share knowledge or adequate doses today,” Peter Maybarduk, director of the Access to Medicines program at the U.S.-based advocacy group Public Citizen, said in a statement Thursday. “The world would be far better served if instead Moderna cooperated with the WHO and South Africa to accelerate the development of the world’s first mRNA hub, which already is underway and is intended as a learning facility for manufacturers worldwide.”

Today, we announced that we will build a state-of-the-art #mRNA facility in Africa to manufacture up to 500 million doses per year. Since our founding in 2010, our mission has been to make a transformative impact on human lives through our medicines: https://t.co/m7EM6FHPhX pic.twitter.com/KXCBWNZUYO

— Moderna (@moderna_tx) October 7, 2021

“Moderna holds secret a vaccine recipe that humanity needs; a vaccine pioneered significantly by public science and developed in large part by billions in public money,” Maybarduk continued. “From indications, Moderna may control its African plant much as it controls the vaccine now; with commitment to monopoly power. Moderna gives no indication of technology transfer, and meanwhile, is overcharging African nations for its vaccine.”

Maybarduk stressed that given the amount of public funding that went into the development of the Moderna shot, “this is not only Moderna’s vaccine.”

“It’s the [National Institutes of Health]-Moderna vaccine; the people’s vaccine,” he said. “And the U.S. government has the power to order Moderna to share this essential technology with [the] WHO and the world.” But the Biden administration has thus far declined to use its leverage to compel Moderna to share its vaccine recipe with qualified manufacturers in Africa and other regions.

Instead, as Politico reported Thursday, White House officials have “urged Moderna for months to increase its production domestically, in an attempt to help deliver on the president’s pledge to make the U.S. ‘an arsenal of vaccines’ for the world.”

No details about where this factory will be set up. Seems like just a PR gimmick, for now, to derail/stall discussions on #TRIPSwaiver and divert focus from WHO ask for tech transfer to Hub https://t.co/CxfytlssYk

— Shailly Gupta (@Shaillytweeting) October 7, 2021

“Moderna, which developed its shot with scientific and financial help from the government, has shied away making additional commitments,” Politico noted. “The company has cited worries about its ability to balance its domestic and international responsibilities. But administration officials privately believe the reluctance is also driven in part by financial concerns: If Moderna agreed to sell the Biden administration doses for poorer countries it would likely be asked to do so at cost… putting pressure on its bottom line.”

One unnamed administration official told the outlet that the U.S. has spent $8 billion on the development of the Moderna vaccine. “The U.S. government co-invented the vaccine,” the official said.

According to a report released last month by Amnesty International, Moderna “has not yet delivered a single vaccine dose to a low-income country, has provided just 12% of its vaccines to lower-middle-income countries, and will not deliver the vast majority of its orders for COVAX until 2022.”

“Higher prices mean it is set to earn over $47 billion in revenues by the end of 2022,” Amnesty estimated. Moderna’s coronavirus vaccine profits have propelled two of its founders and one early investor to the Forbes 400 list of the wealthiest Americans as billions of people across the globe remain without access to the lifesaving shot. On average, more than 7,700 people worldwide are dying each day from the coronavirus, according to the latest figures from Johns Hopkins University.

The Washington Post reported Thursday that Moderna’s proposed vaccine factory in Africa “will not have an immediate impact on the coronavirus pandemic because it will take two to four years to build.” Lawrence Gostin, a global health law expert at Georgetown University, told the Post that “opening up manufacturing plants in other countries is certainly a step forward, but it doesn’t really change the dynamic” of massive inequities in vaccine distribution.

“There’s this monopolistic grip of a few countries that really controls the narrative, and the availability and the access of lifesaving medical resources—and there’s enormous global resentment about that,” said Gostin. “It’s helpful to have the shiny hospital or the shiny manufacturing plant or the shiny clinic, but what you really want is to have the infrastructure that belongs to the country, with trained, capable people running that infrastructure.”

Wholesale used car prices rose to an all-time high in September as inventories at dealerships remain at historically low levels, given the strong demand for vehicles coupled with ongoing supply chain challenges. 

The Manheim U.S. Used Vehicle Value Index increased 5.3% month-over-month in September, the most significant monthly rise since April. From a year ago, the index is up a whopping 27.1% to 204.8.

According to the Manheim report, surging used car prices have primarily been a function of global supply chain woes impacting new vehicle production, forcing consumers to buy on the second-hand market. Used car prices are expected to remain elevated through year-end. 

In a separate report, Goldman Sachs told clients that inventories at dealers continued to fall from already historically low levels, and it will take time for inventory at dealers to return to normalized levels given the strong demand for vehicles coupled with continuing supply chain challenges (particularly with semiconductor chip shortages, but also due to shipping constraints on either side of the Pacific).

Dealerships have been forced to purchase second-hand cars to replenish inventory due to shortages of new vehicles. This in itself will also keep used car prices higher. 

Incidentally, new car prices are also increasing and will likely continue as automakers said production of new vehicles this fall/winter would continue to be constrained by a chip shortage and the spread of COVID-19 in Southeast Asia. 

This year, used-car prices have contributed to U.S. inflation, responsible for approximately 2% of overall consumer prices. The latest data from Manheim is not a win for “team transitory.” 

Authroed by Fortis Analysis via Human Terrain (emphasis ours),

In mid-April 2021, I began receiving reports from sources in China and the United States that certain regions in China had begun to experience ongoing power disruptions at their warehouses and manufacturing facilities. Most notable of these was in south China’s Guangdong megaregion, where in June operations at the Taishan Nuclear Power Plant had become disrupted by a small number of faulty claddings for the fuel rods, ultimately forcing state-owned General Nuclear Power Group to shut down Unit 1 (there are two units) for maintenance and repair. Concurrently, available power imported to the Guangdong region from Yunnan province’s considerable hydroelectric capacity was reduced due to drier-than-expected weather throughout the spring.

Taken together, some estimates are that total power available to the region fell by as much as 15% by June. In response, officials began quietly rationing power to factories, cutting business operation days by 1 or 2 days depending on the facilities’ power requirements.

In recent weeks, however, officials have begun a much more aggressive rationing program (Figure 1), with factories in much of Guangdong now seeing only 1-2 days per week of power use allowed. Similar situations are reportedly occurring in Jiangsu, Hubei, and Fujian provinces, all major manufacturing regions. As just one example, one of my US-based import customers has reported that a key supplier in Jiangsu is down to a single day per week of power availability. Limited-but-expanded power rationing is also occurring in Zhejiang, Shandong, Liaoning, and other important heavy industrial, chemical, and energy-product hubs.

The primary causes of power disruptions are the aforementioned reduced availability of hydroelectric power in much of southern China, as well as limited supplies of coal due to the ongoing China/Australia trade dispute. The latter cause is expected to be more sustained in impact, as the year-long embargo by China on Australian thermal coal has depleted China’s strategic reserves and caused commercial and residential prices to rapidly spike. China imports about 10% of its annual thermal coal needs; of this, Australia was close to 70% of the total prior to the mid-2020 embargo. It is expected that China will be forced to drop the embargo ahead of the fourth quarter, but this is not certain. Reopening its markets to Australian coal imports would be an important stabilizing step for China’s manufacturing base, but would nonetheless take weeks or even months to ramp back up to normal output.

If China does not capitulate on the importation of Australian coal and cannot close the gap with imports from Brazil, South Africa, and the US, the southern region will continue to see constrained power availability, reducing export volumes especially from Shenzhen’s ports, Hong Kong, and Xiamen, as well as Tianjin, Dalian, and Qingdao in the north. We would expect in this scenario to see these ports be utilized by ocean carriers for more transshipments out of Southeast Asia or central China, while export-focused capacity shifts to Ningbo and Shanghai, as well as alleviating significant congestion pressure at Kaohsiung and Busan. Freight rates are anticipated by some maritime industry players to soften somewhat, though a bullish case for barely-reduced rates could be made that a very large backlog of existing cargo and ongoing delays at US and European ports will keep volumes at a high level through Lunar New Year at least, with a strong likelihood of continuing through the ILWU negotiations.

Looking at 2022, any significant level of ongoing power disruptions will begin to cause fractures in China’s economy, particularly in the finance and heavy manufacturing sectors as well as within the population. Such fissures have in the past led to increased belligerence by China against neighboring and regional countries, which could have unexpected disruptive effects on maritime and air traffic in the Far East. With regard to which sectors of the economic base will receive favored treatment for any surplus power, heavy manufacturing (auto, shipbuilding, infrastructure), high technology, energy (renewable and traditional), petrochemicals, medical, and metal processing will likely be protected first. These are considered critical industries in China due to the PLA’s direct investments into these sectors (as well as the in-kind benefits to China’s military industrial complex), with industries such as homegoods, consumer electronics, and garments receiving the least support. This will in particular impact retailers in the US and Europe who are already falling short on inventory, and were hoping for a strong late-year push to close the earnings year on a high note.

More broadly, it should be expected that the continuity and consistency that China-based supply chains have historically enjoyed will be diminished in the short- to intermediate-term. Fortis expects that Xi will tip China’s dual-circulation economic strategy in favor of protecting domestic consumers, particularly to offset the political instability introduced by energy and food price increases. We can also reasonably expect to see internal enemies of the CCP and PLA be targeted for power rationing, or even villainized as over-users of precious energy resources at the expense of the civilian population. In closing, the energy disruptions in China are but one more canary in the coal mine indicating accelerating catastrophic failure cascades, further consolidation of internal power by Xi and the CCP, and an ongoing bifurcation of geopolitical spheres between China and the US.

Dum spiro spero,

RK

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