China's supply chain threat to U.S. national security
"You can't get a product. You are not going to get a
product for months." That's what Brian Edwards, a medical supplier in
California, has been telling dozens of people per day when they call searching
for critical medical supplies that, before this year, they took for granted
would be in stock.
The Chinese government's mismanagement of the novel
coronavirus not only spread the virus worldwide, it shut down many supply
chains that the U.S. and other countries had become accustomed to; indeed, that
the U.S. deeply relied upon. As we consider how our post-pandemic country will
look, we should be careful to avoid a repeat of these mistakes.
U.S. dependence on Chinese manufacturing was no accident.
The Chinese government's "Made in China 2025" strategy to consolidate
manufacturing supply chains and impose itself as the world's preeminent source
of high-value manufactured goods has been well-known for years. While we have
neglected to safeguard our industrial base, Beijing was aggressively
subsidizing its country's manufacturing plants and creating supply chains that
maximized its economic and geopolitical leverage.
Some of my colleagues and I have worked the White House and
the Department of Defense in the last two years to restrict purchases of
Chinese-manufactured critical materials for use in U.S. military systems, and
the Federal Communications Commission and other agencies have taken the first
steps to stop Huawei and related entities from dominating next-generation
communications hardware. But the COVID-19 crisis demonstrates that a broader
approach is needed.
The U.S. government should develop better, near-real-time
insight into supply chains. Occasional reviews of individual supply chains
create blind spots that major crises will reach unexpectedly. With the tools
that are out there, it should be easier than ever for the government and its
critical suppliers to share data to provide resiliency and security.
The government also needs to take the lead in maintaining
and expanding critical American supply capabilities. It will be crucial to
prevent the pennies-on-the-dollar purchase of distressed American assets during
or immediately after the pandemic by firms linked to the Chinese government.
This includes many major Chinese firms (such as Huawei). The country that
knowingly took steps that allowed the disease to spread worldwide should not be
allowed to financially benefit from those decisions.
At the same time, the government should ensure that American
businesses get the liquidity and capital they need to maintain and expand
critical supply chains within the United States. This can be done through
direct investment into manufacturing plants, but it could also be done by
making purchase agreements and building national stockpiles of needed supplies.
The much-discussed Defense Production Act allows the federal government to both
expand and ensure manufacturing capabilities, and the $1 billion that Congress
provided to the DPA program in the CARES Act should be promptly supplemented
with the direction that the government identify gaps and fragile sectors of
supply chains and build capacity to bulwark them against future crises.
Though the current focus is, deservedly, on China, we should
not think that there are no other foreign countries that seek to identify,
develop, and exploit critical gaps in U.S. supply chains. Russia has always
been a leader in the production of critical defense materials and a known bad
actor on the global stage. Indian companies are routinely cited by U.S.
authorities for dumping materials in critical and noncritical sectors of the
economy. As we have seen recently with everything from thermometers to toilet
paper, though, the supply chains that we rely on for our normal lives can be
stressed in any number of ways.
A strong national approach to securing our manufacturing
base is a necessary step for security and prosperity. The federal government is
the only entity both large enough and focused enough to lead this effort.
Congress should, therefore, act quickly, as soon as the next stimulus bill, to
establish a supply chain monitoring and investment framework that will get
America back to work and provide for a cohesive and united future.
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