Beijing has repeatedly shown the world it is willing to weaponize its dominance over supply chains, and President Donald Trump had to de-escalate the latest dispute over rare earths during his recent trip to Asia. But rare earths are only a small window into the power China could have over the American economy as we adopt tomorrow’s technologies.
Three technologies stand out as particularly critical to U.S. national security over the next decade: artificial intelligence, quantum computing, and biotechnology. Just as China can influence U.S. manufacturing today through rare earths, we face the risk of significant and growing Chinese influence over these foundational technologies.
In fact, America’s dependence on Chinese supply chains is already becoming apparent. U.S. leadership in AI depends on the extent to which U.S. data centers maintain access to specialty chemicals, circuit boards, and networking equipment from China. China controls crucial inputs for quantum computers, including cooling equipment, precision lasers and several essential minerals.
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Perhaps most concerning, China is the sole supplier of at least one essential ingredient for more than a third of the nearly 2,000 U.S.-approved medications, including amoxicillin, one of the most commonly prescribed antibiotics, according to a recent study.
Shipping containers at the Port of Oakland container terminal, California, October 28, 2021. (Reuters/Carlos Barria)
The United States still holds powerful trump cards. The U.S. private sector leads the way in spending on research and development, and U.S. capital markets are the deepest and most liquid in the world, capable of financing ambitious projects. America’s talented workforce, from machinists to STEM researchers, is well positioned to build and benefit from the return of critical supply chains.
But creative incentives are needed to unleash these benefits. Our new one report details on how to do this. The United States must act now and bear the costs of de-risking critical supply chains, or it may have to pay a much higher price later if tensions escalate. Building on the Trump administration’s progress on rare earths, the U.S. government should encourage domestic production of several dozen critical inputs for semiconductors and data centers, including various chemicals and hardware components, as well as essential materials for quantum computing and biotechnology, such as cooling equipment and drug inputs.
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Government action is also needed to mobilize private investment toward quantum computing and biotechnology. The Department of Defense must use its purchasing power, along with contractual milestones, to create demand and competition for the delivery of a viable quantum computer that is powerful and reliable enough to solve real-world problems faster than today’s best supercomputers. Boosting private investment in bioproduction centers across the country would help smaller companies bring new technologies to market by co-financing shared production infrastructure and easing regulations for expansion.
While economic security begins at home, America is not alone in this race. The European Union, Japan and South Korea have pledged investments that could help strengthen U.S. manufacturing and critical supply chains. When the U.S. government stockpiles essential drug ingredients or crucial minerals, it must focus on trusted markets. Several allies have capabilities that can help accelerate and expand new sources of critical minerals, as illustrated by the recent framework struck by the United States and Australia.
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We know from our own experience that the U.S. government can leverage its full toolbox for today’s era of economic warfare and position itself to compete in the technologies yet to come. US agencies and departments are often too isolated to have a full picture of current vulnerabilities or of the risks that are just beginning to reveal themselves. The establishment of an Economic Security Center would strengthen government coordination, improve technical expertise and deepen partnerships with the private sector.
There is strong bipartisan support for strengthening critical supply chains and significant progress to build on. We must maintain that momentum to ensure that the American economy can compete – and win – in this new age of technology.
James D. Taiclet is chairman, president and CEO of Lockheed Martin and co-chairman of the Council on Foreign Relations Economic Security Task Force.
Justin Muzinich is CEO of Muzinich & Co. and co-chair of the Council on Foreign Relations Economic Security Task Force. From 2018 to 2021, he served as Deputy US Treasury Secretary.
