DAILY CALLER NEWS FOUNDATION—American defense startups are far too reliant on Chinese parts—and that poses a serious risk of exploitation by Beijing, experts told the Daily Caller News Foundation.
Business is booming as hundreds of defense startups have joined the growing U.S. military-industrial complex since 2021, according to The Wall Street Journal. But defense contractors are heavily dependent on China for parts for weapons systems, including motors, chips, and rare-earth minerals, which poses potential avenues for Beijing to exploit or hamper American technologies, experts said.
“This is a serious problem for two reasons,” said John Lee, senior defense expert at the Hudson Institute. “First, as we saw during the pandemic, overreliance on Chinese supply chains for components and inputs leaves countries and economies vulnerable to politically or policy-motivated restrictions being imposed by Beijing.”
“Second, components can have elements inserted into them without the knowledge of the end user. This could be spying equipment, channels for China to disable or damage the component from a distance, or even materials that can weaponize the component,” Lee said.
New defense contractors particularly rely on these parts because they don’t enjoy the same cash reserve that the industry giants do, and China makes and sells the parts for a cheaper price.
But these startups don’t want to be so reliant on China, given that the country is actively trying to undermine the U.S. and would likely be an adversary in a global war scenario, industry executives told The Wall Street Journal.
Decoupling from China-based entities proves difficult and expensive, defense startups told The Journal, though it’s the only option in the long term.
“There’s a lot of lip-flapping about national security resilience manufacturing. But there’s no money for us to do this,” Scott Colosimo, CEO of defense startup LAND Energy, told the newspaper. LAND has some funding grants from the Pentagon, but needs more support to thrive, Colosimo explained.
The rare-earth minerals that China provides U.S. defense contractors—including neodymium, yttrium and samarium—are of particular value, given that they are essential for most high-tech military equipment, including laser and missile systems, jet engines, communications devices, and even nuclear propulsion systems.
“Critical minerals are the building blocks for many of the most sensitive products in our defense industry,” said Adam Savit, director of the China Policy Initiative at the America First Policy Initiative. “China can abuse its dominant position in other critical mineral supply chains at any time.”
“The only long-term solution to this is to enact comprehensive permitting reform to approve domestic mining projects, and work with allied nations to develop new production when the U.S. lacks the relevant natural resources,” he said.
Savit’s warning that China can upset the supply chain of rare-earth minerals also invokes a broader problem: China can cut the supply line for any of the parts needed by U.S. defense contractors, for any time or reason it chooses.
“If your supply chain runs dry, you have nothing to sell,” Ryan Beall, founder of drone manufacturer TILT Autonomy, told The Journal.
The Hudson Institute’s Lee warned that the problem exposes the U.S.’s and West’s gaps in domestic supply chain capabilities for their respective defense industrial bases, which creates a vacuum that other actors such as China find ways to exploit.
China supplies more than 90% of the magnets used in motors for ships, missiles, satellites, and drones, according to The Journal. Republican Reps. Elise Stefanik of New York and Rob Wittman of Virginia sent a letter to an Air Force official Sept. 25 and called the reliance on China “a serious national security threat,” pointing to an example in a report last year that found the Air Force increased its dependence on China for parts by 69%.
The idea to stop relying on China for resources became more popular after the COVID-19 pandemic, which created massive supply chain shortages in various sectors, including health care products. But in the defense capacity, it will take years to produce parts domestically, according to The Journal.
“There has been a hollowing out of manufacturing and industrial capabilities in the West, which provides China with an enormous advantage,” Lee told the Daily Caller News Foundation. “In the event of a crisis against a country such as China, this will become very dangerous for the U.S. and its allies.”
Unable to wait for domestic capabilities to improve and increasingly wary of buying from China, new defense contractors are turning to other alternatives for parts, according to The Journal. Sourcing components from Mexico and Southeast Asia, utilizing 3D printing, and buying parts in bulk have been some of the creative ways contractors are solving the problem.
Industry experts also expect that the U.S. government is likely to restrict some Chinese parts used by contractors in a bid to move toward domestic capabilities, according to the newspaper. Some restrictions on items used to produce cameras and radios already exist.
“If the government wants a U.S. supply chain, that’s fine, but they need to be clear about their requirements, and they need to pay for it,” Beall told The Journal.
Originally published by the Daily Caller News Foundation
This article was originally published at www.dailysignal.com
