China A Growing Source of Critical Pentagon Supplies
(Source: The Bunker blog at POGO; issued Aug. 19, 2020)
Speaking of face masks, the U.S. discovered earlier this year as it attempted, vainly, to wrestle the coronavirus to the mat, that it didn’t have the rudimentary supplies it needed, including those face masks (along with swabs, gowns and medicines). It seems that the classic American lust for cheap has driven production of such supplies to China and other lower-cost producers.

Don’t look now, but that reliance on Beijing for American well-being has infected the Defense Department, too, according to a new analytical snapshot (1 PDF page) from Govini, a national-security data analysis firm headquartered less than two miles from the Pentagon. “From 2010–2019, the number of Chinese suppliers in the Department’s supplier base in the sample Govini assessed increased by a total of 420%, to 655, across numerous critical industries,” it reports. “In comparison, U.S. companies grew 97%, to 2,219.”

Govini drilled deeply into the Pentagon’s supply chain, assessing just where the parts the U.S. military uses come from. Sure, the biggest links in that chain are the prime contractors who deal directly with the Pentagon, selling it airplanes, boots, and computers (84% of those companies are American). But 70% of the companies supplying those primes are foreign. Every subcontractor supplying a widget to a prime buys some of its components from other companies. And those companies, in turn, buy stuff from, you guessed it, other companies. And so on.

The share of Chinese firms in “critical” links in the Pentagon’s supply chain jumped 50% (from 6% to 9%) between 2010 and last year. They “rival U.S.-based companies’ share in Specialty Chemicals, Major Diversified Chemicals, Telecommunications Equipment, and Electronic Components,” Govini reports.

The Pentagon knows this is a vulnerability. “What I would like to see is the U.S. have the capacity and through-put to take care of ourselves in times of need,” Ellen Lord, the Pentagon’s top weapons buyer, said in April. “I think we have found that our dependency on China is more than we need it to be.”

The trend is disquieting, given China’s push to expand its nuclear arsenal. It echoes the U.S.-Soviet relationship immediately after World War II, as the one-time allies morphed into Cold War foes. Any suggestion that Tom Friedman’s 1996 McDonald’s hypothesis—that two nations with McDonald’s restaurants wouldn’t go to war with one another—has fallen apart. Burger-and-fry loving NATO nations attacked Serbia three years later, and Russia seized part of Ukraine in 2014. All had their own Golden Arches. So commerce has proven no bar to attack. Now, the U.S. (14,000 McDonald’s) and China (2,700) are reducing their commercial ties.

“The prevalence of China-based companies across the Department’s supplier base will make it difficult to identify with certainty all of the cases where they are a single-source provider of a key technology or material,” Govini reports. Just like with COVID-19, that means we’ll likely only learn that key parts, and parts of parts, are MIA when it’s too late to do anything about it.

Click here for the full Aug. 19 issue of The Bunker, on the POGO website.


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