(Original title: The White House issued a 250-page assessment report to strengthen the supply chain of key products in a multi-pronged way, and experts suggest that China maintains the entire industrial chain and strengthens innovation in mid-to-high-end industries)
The FDA emphasized that the new coronavirus pandemic has demonstrated the importance of a flexible supply chain.
According to Xinhua News Agency, on June 8, local time, the White House released an assessment report on the supply chain risks of four key products: semiconductors, drugs, key minerals, and large-capacity batteries (hereinafter referred to as the “assessment report”), requiring The US federal government has taken measures to address the vulnerabilities of the supply chain of these key products.
This assessment report elaborated on the Biden administration’s policy concept for establishing a resilient supply chain, and pointed out that the new crown epidemic and the economic chaos caused by it further exposed the long-standing vulnerabilities of the U.S. supply chain and established a more secure and resilient supply chain. The chain is critical to U.S. national security, economic security, and technological leadership.
At the same time, the U.S. Senate also reviewed and passed the “American Innovation and Competition Act of 2021,” which aims to increase investment in American technology, science, and research. In response to the bill, Chinese Foreign Ministry spokesperson Wang Wenbin emphasized that how the United States develops and how to enhance its competitiveness is the United States‘ own business. However, we are firmly opposed to the U.S.’s use of China as an imaginary enemy. The biggest threat to the United States is the United States itself. It is more important than anything else to run its own affairs well.
Many experts on Sino-US relations said in an interview with a reporter from 21st Century Business Herald that China should continue to maintain its core competitiveness and expand the scale of foreign investment.
What is a supply chain assessment report
As a phased achievement of the Biden administration’s 100-day U.S. supply chain risk assessment plan launched in February this year, this 250-page supply chain assessment report pointed out the long-term problems in the U.S. supply chain exposed during the new crown virus epidemic. It explained in detail the current challenges and opportunities in the four key areas, and emphasized the importance of a safe and resilient supply chain for US national security, economic security, and technological leadership.
On February 24 this year, US President Biden signed a presidential executive order requiring a 100-day review of the supply chain of four types of products: semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals, and medicines. The executive order also stated that the U.S. government will complete a risk assessment of the production and supply chains of the six major U.S. departments, including defense, public health, communications technology, transportation, energy, and food, and propose improvement measures within one year.
After review, the US government announced on June 8 an assessment report on the supply chain risks of four key products: semiconductors, medicines, key minerals, and large-capacity batteries. The report pointed out that the US government and its branches have already begun to implement the specific measures and recommendations involved in the report. At the same time, relevant government departments have also launched the second phase of the risk assessment plan, which will review national defense, public health, information, and information by the end of February next year. Evaluate the supply chain and industrial foundation in six basic key areas of communication technology, energy, transportation, agricultural products and food.
The White House stated that in order to address the vulnerabilities of the aforementioned four types of key product supply chains, the Biden government will take measures to support the domestic production of key drugs, ensure the establishment of a domestic supply chain for advanced batteries, and strengthen investment in the sustainable production and processing of key minerals. , And cooperate with industry, allies and partners to solve the problem of semiconductor supply shortage.
In an interview with the 21st Century Business Herald reporter, Wang Yong, director of the International Political Economy Research Center of the School of International Relations, Peking University, said that the Biden administration proposed this plan mainly based on two factors: First, in the past 30 years, the US manufacturing industry has gradually moved abroad. This has made the United States vulnerable to other countries in its supply chain. Second, the United States is worried about being threatened by China and wants to take this opportunity to reduce its dependence on Chinese-made products.
Wang Yong believes that the US approach is to shorten the length of the supply chain to ensure the security of the supply chain.
In the semiconductor field, the American Semiconductor Industry Association report shows that in 2020, the United States will occupy nearly half of the global semiconductor market, but its local semiconductor production capacity as a proportion of the global total output has dropped from 37% 20 years ago to about 12% at present. %. At the same time, Asia’s position in the semiconductor supply chain is becoming increasingly prominent. Related industry reports show that Asia occupies nearly 80% of the world‘s semiconductor production capacity, among which US chip design companies are almost entirely dependent on Asian fabs for 7-nanometer and other advanced process chip production.
At the same time, the shortage of chips under multiple factors has had an impact on a large number of industries. The analysis pointed out that the market development over the past ten years combined with the surge in demand under the new crown epidemic, the supply bottleneck caused by the highly centralized wafer production, and the development of the electric vehicle industry, etc., have jointly led to the continuous shortage of chips. According to consulting firm AlixPartners, the chip shortage will cause global auto companies to lose nearly $11 billion in revenue.
The evaluation report recommends that the US government should strengthen government investment support in semiconductor production and processing, encourage the development of local chip processing ecology, support the development of small and medium-sized enterprises in related fields, and protect the United States’ leading advantages in advanced process packaging through policy measures.
In the field of key mineral resources, according to a 2015 report by the Congressional Research Service, the United States is almost entirely dependent on Chinese imports for metal minerals such as indium and scandium, and its dependence on China for rare earth resources exceeds 50%. Documents issued by the White House show that China also occupies a larger share of the world in terms of mineral refining capacity. The White House acknowledged that China’s advantages in refining and processing have enabled the United States to rely on China’s processing, and then use it for end product manufacturing, even if the United States expands mineral sources or increases domestic mining in the United States.
The evaluation report recommends that the U.S. government expand cooperation with its allies and partners in related fields, diversify the supply chain, and invest in sustainable production, refining and recycling capabilities domestically, and invest in sustainable development, and encourage the establishment of “environmentally and socially responsible” “The production standard.
In terms of large-capacity batteries, the White House stated that advanced large-capacity batteries are critical to the transition to clean energy and the development of national security capabilities, but the United States currently relies heavily on foreign imports. According to a research report released by the analysis agency Bloomberg New Energy Finance, China has an absolute lead in the production of large-capacity batteries. As of 2020, China controls 80% of the world‘s refining of mineral raw materials, 77% of battery production capacity and 60% of component manufacturing in terms of lithium batteries.
The evaluation report requires the US government to immediately increase investment in related fields, invest in and purchase key minerals used in battery production, expand local production and supply chains, and develop scrap battery collection and recycling.
In addition, the assessment report shows that the new crown epidemic has exposed the fragility of the essential drug supply chain in the United States. The main components of a series of key drugs and generic drugs in the United States are still heavily dependent on imports. These products account for 90% of all prescription drugs. At the same time, approximately 87% of generic drugs have API facilities outside the United States, and the supply chain is uncertain. Sex has led to a very fragile supply of domestic medicine in the United States.
The evaluation report requires the U.S. government to expand relevant investments to expand domestic production in the U.S. and establish emergency capacity to ensure the resilience of the U.S. pharmaceutical supply chain.
U.S. departments are actively “spending money”
In response to the assessment report, at a press conference on the afternoon of the 8th Eastern Time, Sameera Fazili, deputy director of the National Economic Council, said that in order to achieve the goal of a resilient supply chain, the US government will expand key areas. Invest in and support the actions of US manufacturing. Fazili emphasized that the United States will cooperate with allies on issues such as the supply of mineral resources to reduce dependence on geopolitical competitors.
Fazili said that the US government has organized a working group led by the Secretary of Commerce, the Secretary of Transportation, and the Secretary of Agriculture to take action on supply chain issues in the semiconductor, housing and construction sectors, transportation, and agri-food sectors.
At the same time, Peter Harrell, the senior director of the US National Security Council responsible for international economic and competitiveness affairs, said that the US government is forming a “strike task force” led by US Trade Representative Dai Qi to identify and crack down on rival countries that “undermine US supplies.” Unfair trade practices in the chain”.
Harrell also said that the Biden administration has called on Congress to allocate at least $50 billion to strengthen the US semiconductor manufacturing industry, including cutting-edge semiconductors and related products that are currently in short supply in the automobile manufacturing industry. At the same time, the US is also encouraging chip manufacturers from other countries to expand in the United States. investment. For example, Harrell said, Intel, Samsung, GlobalFoundries and other companies have announced to expand production capacity in the United States. White House documents show that the US Department of Commerce has invested about 75 billion US dollars in the R&D and production of local private semiconductor companies.
In response to the issue of the drug supply chain, according to public documents from the White House, the U.S. Department of Health and Human Services will make an initial investment commitment of approximately US$60 million in accordance with the relevant regulations of the U.S. National Defense Production Act to expand the main ingredients of generic drugs produced in the U.S. Ability.
According to the official website of the U.S. Food and Drug Administration (FDA), the U.S. Department of Health and Human Services (HHS) and FDA will jointly set development strategies with the private sector and Congress to create a powerful and flexible pharmaceutical and API (API) The supply chain of production, such as promoting the adoption of new methods for the production of commercial drugs and biological products.
In addition, the U.S. Department of Health and Human Services is developing a sustainable public health supply chain to ensure that it is capable of responding to possible future epidemics and biological threats in the United States. The FDA pointed out that a tough drug supply chain must have at least the following three key characteristics: the ability to produce high-quality products for the US market; a diversified drug supply chain, such as diversified manufacturer locations; a multi-point flowering supply chain, For example, each product has multiple manufacturers.
“This evaluation report points out that the drug supply chain is complex, global, susceptible to interference and deeply affected by certain market factors. This has led to the increasing dependence of American public services on foreign-made drugs, APIs and their The key starting material.”
An expert familiar with the U.S. pharmaceutical industry told the 21st Century Business Herald that there are almost no API manufacturers in the U.S. pharmaceutical industry chain, and it mainly relies on imports from China and India. “If you want to reshape this supply chain, it will be difficult or greater.”
Regarding the issue of large-capacity batteries, the US Department of Energy will hold a related industry meeting later in June to discuss the issue of the large-capacity battery supply chain. The U.S. Department of Energy’s Loan Program Office (LPO) will use approximately $17 billion in loan authorizations from the Advanced Technology Automobile Manufacturing Loan Program (ATVM) to support the domestic battery supply chain in the United States. At the same time, the Federal Energy Management Program (FEMP) of the US Department of Energy will provide necessary technical assistance and financial support to energy projects that meet the requirements.
In terms of key metal minerals, the White House document shows that the U.S. Department of the Interior will set up a joint working group of agencies such as the U.S. Department of Agriculture and the Environmental Protection Agency to investigate the domestic mineral production and processing capabilities in the United States. The U.S. government will set up an interagency working group to coordinate the Department of the Interior, the Department of Agriculture, the Environmental Protection Agency and other related professional organizations to investigate the deficiencies in the existing regulations and systems. The U.S. Development Finance Corporation will also expand international investment in related fields.
According to public documents issued by the U.S. Department of Defense in 2020, the U.S. Department of Defense has signed contracts with a number of rare-earth element producers to expand the domestic and non-Chinese rare-earth mining and production capabilities.
China needs to increase foreign investment and innovation capabilities
Regarding the efforts of the United States to revitalize the manufacturing and supply chain, Wang Yiwei, director of the Institute of International Affairs of Renmin University of China and expert of the China Council for the Promotion of International Trade, said in an interview with a reporter from 21st Century Business Herald that the decline of the US manufacturing industry was accompanied by the development of financial hegemony. And the inevitable result.
Wang Yiwei said that efforts to de-globalize may be achieved on some levels, but a full-scale de-globalization is unrealistic from the perspective of the laws of economic development, and the contradictions among American allies and domestic contradictions also restrict the situation. The effect of related efforts.
As far as China is concerned, Professor Wang Yiwei believes that although the United States is challenging in specific practices, China should also be vigilant about U.S. plans in this regard, and at the same time, it must actively establish rules and systems in the fields of global environmental protection and labor. Fight for your own voice.
Although this assessment report is believed to be aimed at China, Wang Yong said that Biden’s ambitions may be difficult to realize.
Wang Yong believes that this plan faces many challenges, and one obstacle is the market factor. “Some industries have been transferred to emerging economies and developing countries. If you want to return to the United States, it is more difficult.” He also pointed out that the United States is currently a service-oriented economy, and it is also necessary to reverse this economic structure. No easy task.
Wang Yong suggested that, first, China should not panic and need to maintain its own competitiveness and advantages-maintaining the entire industrial chain; second, China should strengthen industrial cooperation with other countries and strengthen investment in foreign countries; third, China Innovative efforts in mid-to-high-end industries are needed to improve China’s competitiveness.
(Author: Shi Shi, Edited by Wang Zihan: Chen Qingmei)
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