Sen. Marsha Blackburn White Paper on China: U.S. Needs to Secure Its Critical Supply Chain

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“People want to see China held accountable. They want us to come forward with ways to significantly change our relationship with China. And they do not want China to be a beneficiary of the American consumer or of our government,” Blackburn said during a conference call.

One of the white paper’s key recommendations was for the United States to move its critical supply chains out of China.

The manufacturing of active pharmaceutical ingredients (API) outside the U.S. — and increasingly in China, poses a national security risk, the paper said.

According to the paper, 72 percent of API manufacturing takes place outside the U.S., and the number of facilities making APIs in China has more than doubled since 2010.

“The COVID-19 pandemic exposed two major vulnerabilities baked into the United States’ current pharmaceutical supply chain: an overall susceptibility to drug shortages, and a lack of control over supply so severe as to constitute a national security risk,” it said.

The Food and Drug Administration (FDA), on a list of supply-chain shortages due to the COVID-19 outbreak, noted three antimicrobial drugs in clinical trials for efficacy against COVID-19: azithromycin, chloroquine, and hydroxychloroquine, the paper said.

“Because the U.S. remains dependent on foreign sources of API, these and other critical drugs could easily move from a shortage situation into nonexistence,” the paper warned.

A Defense Health Agency (DHA) senior official said the agency remains “concerned about any situation where foreign actors, such as China, control substantial access to critical warfighting materiel and potential serious risk of interruptions in the supply chain or posed by 30 contaminated APIs.”

Even before the COVID-19 outbreak, the FDA’s Center for Drug Evaluation and Research (CDER) Director Dr. Janet Woodcock warned of the need to safeguard the pharmaceutical supply chain, calling the cessation of American manufacturing of APIs a key health and security concern, the paper said.

The U.S.-China Economic and Security Review Commission has also assessed that there are “serious deficiencies in health and safety standards in China’s pharmaceutical sector” due to a poorly regulated industry, Beijing’s refusal to cooperate with routine inspections, and outright fraud in Chinese manufacturing, it added.

Similarly, the paper looked at China’s control of the world’s supply of 17 metallic elements known as “rare earth elements” (REEs), which are necessary components of more than 200 products that include high-tech consumer products such as cell phones, computer hard drives, electric and hybrid vehicles, flat-screen monitors, and televisions.

They are also used in significant defense applications to include lasers, electronic displays, guidance systems, and radar and sonar systems, it said.

“From Apple’s iPhone-series to Lockheed Martin’s fifth-generation F-35 fighter jet, many U.S.-based companies rely on Chinese REEs to manufacture components in high-demand consumer and defense articles,” it said.

China has been the leading producer of REEs since the late 1990s and has accounted for more than 90 percent of global production. In the early 2000s, it began restricting exports, driving REE imports from China from $6,969 to $170,760 per metric ton, a 2,359 percent jump, it said.

“China’s domination of the global REE supply could enable it to disrupt American supply chains, presenting a significant security threat to the U.S,” the paper said.

The paper also said reliance on Chinese drones, which dominate the market, also risks U.S. national security as information collected by them could be turned over to the Chinese Communist Party by law.

Asked whether relying less on cheap Chinese products would cost Americans more, Blackburn responded that the U.S.’s current economic relationship with China has cost Americans “dearly.”

“One of the most expensive endeavors we have ever had to encounter as a country is the impact of COVID-19. It has cost our nation about $6 trillion dollars, and the number is still climbing. So that has been a very expensive process,” she said.

“People look at what has transpired with China with manufacturing and they say, ‘Hey, China took our jobs and they sent us a virus. And that has cost us dearly.’ And so many people are saying, ‘Let’s get this right and let’s look at how we break away from some dependance on China,” she added.

The paper also reviewed the history of Communism and the history of the Chinese Communist Party. It argued that current Chinese President Xi Jinping is following in the footsteps of Mao Zedong, the Communist Chinese Party dictator that founded the People’s Republic of China (PRC) and pursued policies that led to the deaths of millions of Chinese.

The paper issued a number of recommendations for the U.S.-China relationship in the future and urged U.S. lawmakers not to become complacent.

It said the U.S. “wields considerable influence” over the world’s posture towards China, but that lawmakers and other officials should not assume that influence will translate into victory.

“The economic and social fallout from the COVID-19 pandemic will undoubtedly contribute to policy vacuums as various nations decide how their relationships with the PRC will change. However, the temptation of cheap equipment, labor, and other contributions to global supply chains will not simply disappear,” it said.

“American lawmakers must be able to effectively explain the PRC’s motivations, and describe how compliance with their demands — whether economically, militarily, or socially — will necessarily cause a regression in the prominence of democratic norms,” it said.

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