The United States is increasingly concerned that China could use the power that it possesses over global supply chains as a weapon against Western powers — namely America.
The Director of National Intelligence recently issued its “Annual Threat Assessment,” which said that the communist country is already strong-arming foreign countries and companies to transfer intellectual property and technologies to it.
The “weapon” it is using is the dominance it has over global supply chains.
“The government of China is capable of leveraging its dominant positions in key global supply chains in an attempt to accomplish its goals, although probably not without significant cost to itself,” the report says.
If China were to be able to gain control over Taiwan, as it’s been seeking to do, the threat could become even more pronounced, according to the report. That’s because Taiwan is one of the world’s leading producers of “cutting-edge” semiconductor chips.
“That’s good risk management, to be diversifying your supply chain,” says @CFR_org President @MikeFroman. “The Chinese aren’t happy about it. They’re trying to get U.S. companies and other multinational companies to come back into China.“ pic.twitter.com/iBeWMrVeV0
— Squawk Box (@SquawkCNBC) February 7, 2024
Global supply chains play an integral part in the world economy today.
A 2023 White House report highlighted the results of a recent working paper, which found that “25% of the total real GDP decline during the pandemic was due to the effects of national lockdowns and their associated effects on labor availability which was transmitted through global supply chains.”
This report and others like it accentuate just how troublesome one country’s dominance over even a part of the supply chain could be — especially if that country is China.
The “Annual Threat Assessment” pointed out that China has established dominance in the pharmaceutical, solar panel, battery, critical minerals and semiconductor sectors. And it’s not just conjecture that China might use this power against others.
In April 2020, for instance, Xi Jinping, the president of China, said his country wanted to increase its control over supply chains so it could “use those supply chain dependencies to threaten and cut off foreign countries during a crisis.”
This poses “a significant risk” not just to the U.S. but to other Western nations in both consumer and manufacturing sectors if China were “able to adeptly leverage its dominance for political or economic gain,” the report said.
