US worries China will use supply chains as weapon

The United States increasingly worries that China will use its power in global supply chains as an additional weapon to advance its political and military might, a report released Wednesday showed.

The "Annual Threat Assessment" issued by the Director of National Intelligence said China is already using its supply chain dominance to force foreign companies and countries to transfer technologies and intellectual property to it.

But the US intelligence community sees Beijing using this economic power in parallel with military strength to secure regional and global influence.

"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 said.

That could be a particular danger if China is able to take over Taiwan, another leading contributor to industrial and technology components, it said.

China seizing Taiwan "probably would have wide-ranging effects, including disruption to global supply chains for semiconductor chips because Taiwan dominates production of cutting-edge chips," it said.

The disruptions of the Covid-19 pandemic showed the world the importance of supply chains -- the way components of products make their ways from myriad sources around the world through various countries for preliminary and final assembly before products reach the market.

The pandemic demonstrated how the disruption of a single factory in China or elsewhere could halt the work of major industrial operations around the globe.

The "Annual Threat" report singled out China's dominance in technology sectors including semiconductors, critical minerals, batteries, solar panels, and pharmaceuticals.

It pointed to an April 2020 speech by Chinese President Xi Jinping who said China sought to increase control of key supply chains to be "able to use those supply chain dependencies to threaten and cut off foreign countries during a crisis."

"China's dominance in these markets could pose a significant risk to US and Western manufacturing and consumer sectors if the Government of China was able to adeptly leverage its dominance for political or economic gain," it said.

The Threat report also singled out other distinct military challenges from China.

It said the People's Liberation Army Rocket Force's conventional missile capabilities "probably" now pose a serious threat to US forces and bases in East Asia.

In space, by 2030 China will probably be "world-class" in all but a few specific technology areas.

By that time, too, China's commercial space sector will be a major global competitor that could undercut the prices of Western rivals, it said.