Decouple and Control: US Must Secure Supply Chains, Production

July 1, 2020 Updated: July 6, 2020

Commentary

Beijing’s June 30 decision to impose its national security law on Hong Kong renders the Sino-British Joint Declaration of 1984 null and void. Promising one China, two systems, that treaty guaranteed Hong Kong’s political autonomy through 2047.

So another Chinese Communist Party (CCP) guarantee has entered the dustbin of history. Now, tyrannical whim backed by military threat will rule the city. After a decent interval of propaganda glorifying “one China, one system,” the Pearl of the Orient’s free media and honest courts will die along with its democracy.

CCP guarantees go poof when its senior leaders decide breaking a treaty, ignoring a contract, or hedging a deal serves them. In short form, that’s unfortunate Hong Kong’s strategic lesson.

To protect their own political, economic, and military security, the United States and other democracies must treat Beijing’s CCP regime as the aggressive adversary it is.

Unfortunately, the economic globalization process that accelerated in the 1990s entwined the U.S. and Chinese economies. A large slice of U.S. manufacturing moved offshore. China began producing computers, communications gear, and pharmaceuticals. Why? As China’s economy modernized, the United States bet political liberalization would follow. International integration would moderate China’s communists, and a democracy focused on internal development and peaceful economic competition would emerge.

Information globalization, however, didn’t follow economic embrace. The Great Firewall of China (attempting to isolate Chinese digital connectivity) exemplifies CCP hedging.

Evidence of CCP dirty dealing emerged in the 1990s, even as the United States lost critical production capacity and ceded control of vital mineral resources to unreliable foreign states. Evidence that America was vulnerable to a rare-earths embargo emerged in 2010. The COVID-19/Wuhan virus pandemic has exposed the fragility and flaws of globalized supply chains and extensive offshore production, especially drugs and medical gear.

To its credit, the Trump administration has insistently acknowledged that the China liberalization bet failed and its failure must be addressed.

Two words describe the solution: decoupling and control. Decoupling is wonk-speak for separating supply chains. (The word’s easy; the chains and decoupling process are complex horrors.) “Control of production” means “build it yourself.”

America can rely on Mexico, Canada and, I’d say, roughly a dozen other nations for the production of critical military and health-related goods. However, reliance on nation-states beyond North America always has risks.

The Trump administration’s “neo-NAFTA,” the U.S.-Mexico-Canada Agreement, is a powerful economic and diplomatic tool for decoupling from China’s pirate economy. Other key U.S. allies in the Indo-Pacific might be interested in a similar arrangement. (Indo-Pacific is Pentagon-speak for Japan, Australia, South Korea, Singapore, and—Washington hopes—India. Don’t discount it. Chinese and Indian troops are spilling blood in the Himalayas.)

On June 24, the Senate Energy and Natural Resources Committee held a hearing on mineral supply chains. Committee Chair Sen. Lisa Murkowski (R-Alaska) said this in her initial remarks: “The pandemic has brought home that we don’t produce many goods important to our country. Over the past several months, that has become clear for a range of crucial medical items including personal protective equipment for doctors and nurses as well as individuals. But it also extends to a much wider range of health care, electronic, industrial, defense and energy technologies.”

Testimony added specifics. Portable heart monitors “wouldn’t function without the minerals lithium, nickel, and zinc.” Magnets and batteries in many defense technologies rely on rare-earth elements (direct quote: “a host of minerals that almost no one can name that are critical to our economy, our security, our competitiveness, and our health.”) China and Russia have significant control over “upstream raw resource supplies” and manufacturing finished products. For example, Russia dominates uranium production. The transcript mentioned China’s 2010 threat to cut off rare-earth access.

Sen. Steve Daines (R-Mont.) called the situation “a national security nightmare.”

Indeed, it is.

Austin Bay is a colonel (ret.) in the U.S. Army Reserve, author, syndicated columnist, and a teacher in strategy and strategic theory at the University of Texas. His latest book is “Cocktails from Hell: Five Wars Shaping the 21st Century.”

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.