Via Zerohedge

Last night, we wrote the following in conclusion to our report on the dire numbers coming out of Hubei. Essentially, we predicted that President Xi was cranking up the Party’s scapegoating machine and getting ready to blame the undercounting of coronavirus cases and deaths on local officials.

Who could have seen that coming? The stock market wanted so badly to believe the Chinese data… bonds and commodities knew better.

But of course, smart traders who were paying attention yesterday might have been able to deduce that something was up. Beijing dismissed some of the top health officials in Wuhan and Hubei earlier this week, and last week it administered administrative punishments to hundreds of lower-level bureaucrats.

They have already been set up to take the fall for President Xi and his inner circle. Let the scapegoating begin.

Earlier in the week, Chinese media and the South China Morning Post, a newspaper in Hong Kong, reported that the Communist Party was preparing to punish the two top party officials in Hubei over their botched response to the Covid-19 outbreak. Of course, local officials have repeatedly claimed that their hands were tied by the national party, as President Xi and his inner circle were paranoid about the news getting out and jeopardizing China’s ambitious growth targets.

But unfortunately for the party leadership, the outbreak didn’t simply go away. Instead, it has evolved into a global plague and caused the deaths of nearly 1,500 people in just a few weeks, putting the SARS outbreak, which terrorized China and the international community in 2002 and 2003, to shame.

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But that doesn’t matter. Because on Thursday morning, the Communist Party officially fired the top party officials in the province over his handling of the epidemic. Party Secretary of Hubei Province Jiang Chaoliang is being relieved of his position, to be replaced by Xi loyalist and current Shanghai mayor Ying Yong, according to the New York Times.

Ma Guoqiang, the top party official in Wuhan whose name is probably familiar to those who have been closely following the situation in the city, has also been fired. He will be replaced by Wang Zhonglin, currently the party secretary of Jinan, a city in China’s east.

Xi couldn’t have set this is up more perfectly: The public has been clamboring for local officials to pay for botching their handling of the outbreak. Several stirred up anger by appearing in public without masks, or with their masks worn incorrectly. But by far their largest transgression – at least in the eyes of China’s tightly controlled public – was the decision to punish Dr. Li Wenliang, the opthamologist who tried to warn the city about the virus, but was punished for his efforts, and later died fighting the virus. Dr. Li has become a martyr across China, and the Communist Party needed to find a way to distance itself from his death, or risk more widespread “instability.”

They’ve succeeded.

Yesterday, we reported that the number of people confirmed to have the coronavirus in Hubei, which is at the center ofthe outbreak, soared by 14,840 on Wednesday thanks to a change in China’s testing and classification standards  after turning away thousands of deathly ill patients in Wuhan. That brought the total in the province to 48,206, while the total worldwide

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Across China, the number of confirmed deaths is approaching 1,400, with still only a couple of deaths outside China.