China's Supply Chain Domination: CCP Directed, U.S. Assisted – Zooming In

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China's Supply Chain Domination: CCP Directed, U.S. Assisted – Zooming In

does the supply-chain dependence pose a national security threat if China cuts its supply today in how long and the American people wouldn’t be able to buy generic drugs I think in a matter of a couple of months we’d be really seeing some problems where earth is another vulnerability if it easy for China to work at night this is decades in the making you can’t flip it overnight how did the rest of the manufacturing move to China it’s this concentration where you had one buyer in America that could dictate to a thousand different businesses what they should be producing and selling for and that one buyer in America could then move production for a thousand companies over to China welcome to zooming in I’m Simone Gao before the CCP virus pandemic the global supply chain discussion was purely about economics four months into the pandemic the same discussion now points to only one thing national security the pandemic exposed to our vulnerabilities and only now are we starting to realize what a dangerous situation were in the massive supply chain migration has gone on for the past few decades what critical parts of the supply chain have moved away how did it happen and most important of all what is the mastermind behind all this intend to achieve in this episode of zooming in we explore these questions since the end of March the amount of infections and deaths turned upward sharply in the u.s. naturally so did the fear of Ronnie automatic equipment according to recent documents released by the House Oversight Committee the strategic national stockpile satis medical supplies are nearly depleted about 90% of his protective beers in the federal stockpile who were shipped out to states grappling with a ccp virus the medical supplies shortages have a significant background to keep in mind first protective gears were part of their shelves of pharmacies and retail stores long before the country became the epicenter according to a recent survey from the national community pharmacies Association 96 percent of pharmacists in the country were selling face masks and 95 respirators and sanitizers faster than they could restock much of the demand in the beginning though came from people who wanted to sell them to China either to gave to their families or donate them to the home cities the Chinese social media platform dough in who has the same Chinese parent company as tik-tok published to countless videos about such stories some Chinese Cambodians donated 1.14 million masks to China this batch of PPE will arrive in Hubei Province jewtown province and other areas with serious outbreaks 20 tons worth of essential medical supplies are arriving directly from dubai to hospitals those supplies were donated to the first hospital of jaejoong province as well as to other medical institutions in order to send this batch of supplies which is worth 2 million yen on time two truck drivers in China drove 24 hours straight stopping only for bathrooms and instant noodles while these spoke purchases started off well intentioned some of them went too far a viral video recently posted to Twitter shows a Chinese woman who lives in America gloating about buying up all the masks across several US stores while loading them onto her pickup truck she named her video post I leave nothing for the Americans the woman named her ting Jiang is a purchasing agent who buys products in bulk for resale in Asia she later won out to boast that where she had gone was a historical moment the video has stoked a social medias wrath joining the overwhelming amounts of negative comments within the Chinese communities over the woman’s selfish actions but in order to understand this type of behavior we ought to put it into context since January the Chinese regime has mobilized to overseas Chinese to take advantage of the system The Epoch Times reported about the Chinese Communist Party’s United Front work departments encouragement of this behavior the official website posted a comment ready keep on buying well sending back to China and try your best to buy as much as possible the United Front work department functions to push the Chinese

dice for our to do the party’s bidding but simply galvanized individuals actions cannot and will not satiate the regime’s voracious appetite both Chinese state-run enterprises and private firms Jourdain on global sourcing according to Chinese customers data China vacuumed up two billion mosques in a five week period starting in January that’s roughly equivalent to two and five months of global production China also imported 400 million pieces of other protective gear from medical goggles to biohazard coveralls another example of medical equipment hoarding was exposed in Australia according to The Sydney Morning Herald throughout January and February the Greenland group in recent Australia – Chinese government back to property companies based in Sydney hoarded millions of personal protective equipment or PPE items the stash included three million face masks more than the million pairs of gloves 800,000 hazmat suits thermometers hence sanitizers and other medical items for shipment to China throughout January and February that was well before the chrono virus permeated through the United States the United States was oblivious about China’s hoarding of medical supplies partially because falsified data coming out of China made the outbreak seem less serious than it truly is when the United States and the rest of the world started to see the true scale of this pandemic another shocking realization followed in the wake of the disease not only were there not enough medical supply in stock but no one had the ability to produce them either before the CCP virus first broke out China made half the world’s masks that production has since expanded nearly twelve fold with the nation now producing 116 million masks a day since the outbreak the Chinese Communist Party has directed two pharmaceutical manufacturers to prioritize domestic needs by selling masks straight to the government for distribution the CCP similarly coerced the foreign companies inside China a New York Post report detailed one instance relate by a senior White House official executives from 3m recently revealed that the Chinese government began blocking exports of medical supplies produced by their factories in China thanks took an even darker turn after Chinese industries resumed production in early March China state news agency Xinhua threatened the Trump administration to tread lightly else China could been pharmaceutical exports and plunged the u.s. into the hell of new coronavirus epidemic in response to the threat Senator Tom cotton and representative Mike Gallagher introduced the bill on March 18th the protecting our pharmaceutical supply chain from China Act the bill aims to end US dependence on China for pharmaceutical products and just how relying our way on China for medicines at a Senate committee hearing in February former FDA Commissioner Scott Gottlieb explained in detail the extent of China’s dominance according to the US Department of Health and Human Services US hospitals and pharmaceutical firms rely on Chinese manufacturers the products range from the active pharmaceutical ingredients API to finish the drugs as of last year 97 percent of antibiotics sold in the u.s. came from China much of the actual formulation of finish the drugs is done outside China and often in India however the starting and intermediate chemicals are often sourced in China according to a report from the us-china economic and security review commission China’s chemical industry accounts for 40% of global chemical industry revenue these chemicals create troll points in the global supply chain for medicines to date America has virtually lost ability to produce critical medicines such as penicillin and DOCSIS Eiling without these chemicals that’s because the last penicillin fermentation plant in the u.s. coast in 2004 before China became the dominant supplier for medicines the world was in a much different place in the 1990s the US Europe and Japan manufactured in ninety percent of the global supply of the key ingredients for medicines and vitamins however the CCP changed this global picture dramatically how did it come about I interviewed rosemary Gibson senior

advisor of the Hastings Center in author of China rx exposing the risks of America’s dependence on China for medicine it happened for a couple of reasons one the United States had a law allowing generic drugs Witcher means that drugs that have been off on patent with patent protection they’re no longer on patent protections to make them cheaper for people some manufacturers wanted a cheaper way to make them and so they moved east that began in the 80s late 80s early 90s the other very important event was when the United States opened up free trade with China in 2002 joined WTO in 2001 it’s remarkable in China rx that’s I noticed a pattern that when we opened up free trade with China and they joined the WTO within a year or two that’s when we lost the last aspirin plant in the United States it’s when our last penicillin plant closed it’s when our last vitamin C plant closed it’s when a very important blood thinner called heparin when US companies began to source the raw material from China so the trade policy who knew the trade policy has such a profound impact and our medicine supply but it’s not just trade what we saw and there’s a chapter in China rx about the penicillin and vitamin C cartels China was cheating it dumped product sold it to the United States and other countries at below market prices and drove out the other producers right and after that what did they do when their they raise prices and they have global dominance this was a consistent pattern that when it was prepend Asselin the last u.s. plant shut down in 2004 and that was the year that we have data to show in China are expats the year when China began dumping it on the global market and that even drove out producers in India so India depends on China for very important antibiotics as well because of these unfair trade practices and of course China subsidizes its domestic companies making it very difficult for companies and other countries to compete over the years the CCP has weaponized the pharmaceutical manufacturing what does this mean to the American public and why is China’s dominance extremely dangerous miss Gibson had this to say what we’re seeing with regard to the masks is that companies that were producing masks for the US and other countries those company manufacturers were ordered not to export masks because they were needed in China and that’s understandable but this is a consequence of the global supply chain being concentrated in a single country if there is an outbreak in other countries where are the masks going to come from this is why one of the recommendations in China rx is that we diversify our manufacturing base that we get supplies from multiple countries and in some cases we’re going to have to each develop our own manufacturing capability is if there’s an outbreak in Europe or Canada or Australia now or in the future each country is going to want to keep product for their own people and that’s perfectly understandable but it leaves everybody else fall nerble can you give us a time estimate like if China cuts its supply today in how long the US the American people wouldn’t be able to buy generic drugs from the store it’s hard to tell they might vary and it depends on inventory and we’re not hearing transparency from companies they may not want to raise concern among the public but I think in a matter of a couple of months we’d be really seeing some problems if it persists and if demand persists in China coming up apart from medicines china has another lethal dominance stay tuned along with pharmaceuticals there’s another supply which China controls which is integral to our modern life that supply is rare-earth there are two things you need to know about rare earth first growers are needed in making advanced electronics from cell phones to high-tech weaponry to China produces most of the rare earth in the world today again this was not the case three decades ago back in the 80s the US was the largest producer of grow earth the nation was self-reliant and produced the rare earth oxides as well as the magnets

essential to both civilian and military electronics since 2000 however China has cornered the market on rare earths production along with the high-tech components that depend on it from 2014 to 2017 China supplied 80% of the rare earths imported by the US the US Geological Survey reports that as of 2018 China provided 80% of worldwide production however many of these imports are now on hold because of the CCP virus outbreak there’s no doubt the China centric global supply chain poses a major strategic problem for the US how do we get there I asked David Wilcock president and CEO of evolutionary Meadows Corp well so if we look to how we got here the Chinese have subsidized a significant portion of what we call in the United States critical minerals so as identified by the United States government there’s 35 of these critical minerals around half of these are a hundred percent mind and or refined by China so when we look how we got here as a whole to answer your questions to known that the Chinese were very specific in a strategy where they knew without these little metals minerals we couldn’t fully manufacture a complete product which puts a bottleneck on the supply chain and so by allowing these industries the economics not to work by allowing the Chinese to subsidize a product that we weren’t actually subsidizing we end up in the situation northern end today the u.s. disadvantaged today owes especially to China’s monopolizing the processing capacity according to the Wyoming Mining Association rare earths are notoriously difficult to process and refine because they aren’t found in large quantities or veins like other minerals such as gold these critical minerals need to be separated from one another using a variety of mining and processing techniques extracting the rare earths also as environmental complications which further increases the cost the Chinese regime identifies these problems years ago and gradually turned that to his own advantage here’s how they do it illegal and undocumented production is commonplace in China and accounts for twenty to forty percent of Chinese production according to the US Geological Survey China’s lacks environmental standards combined with low labor costs and ruffed of government subsidies have allowed it to slash rare earth production costs in this way it has undercut many processors in the West to the point of a bankruptcy the California mountain pass mine closure is an exclamation mark in that take over in 2015 Moli Corp and American Mining Corporation shut down its production at California’s montón pass mine it was the last remaining rare earth mine in the US once China became a monopoly in rare earth production it is not surprising that it started to weaponize it China’s threat to cut off rare earth exports to the u.s. became evident at the height of the us-china trade war in may 2000 19 the Chinese official warned that products made from China’s rare earths should not be used against the country’s development the comment came up to Chinese commerce leader Xi Jinping visited a major rare earth mining and processing facility in Jiangsu province in May the two instances were taken as a veiled threat aimed at both the US and his technology sector that are dependent on the materials in fact the Chinese Communist Party historically took pleasure at reminding two political rivals of its monopoly during their 2010 standoff over the disputed Senkaku Islands China cut of rare earths exports to Japan Chinese officials maintained it was merely introducing export quotas to protect the environment is it easy for China to weaponize such a monopoly I don’t think it was easy you know if you look at the historical fact patterns of what they’ve done this is this is decades in the making and as I was saying in your previous questions Timon it’s it you you can’t flip it overnight you can’t reverse this is a strategy that Beijing is pursued for a very very long time and as we’ve overlooked certain things within many different

sectors or who said that you know it makes sense for us to bring mining assets you know away from the United States away from North America we have allowed this situation to happen and I think it’s it’s very important to point out right now with you know what’s going on in the world and the outsourcing that we’ve done within you know China as a whole you know we looked at what’s happening with coronavirus right now we looked at the medicines that the Chinese control and what could and if they were to cut us off and and this is you know it’s blanket across a lot of industries I mean it’s a very scary thing to realize how much time it takes to turn this turn this around coming up all the consolidation of mass merchandise drove the u.s. to China if there’s one image that captures the chronovisor spanic sleeping through America it would be the empty store shops where household staples usually sit every day retail workers are struggling to restock toilet papers aches produce and can’t goods as fast as the items fly off the shelves in the age of the instant shopping these empty shelves mean that the basic supply chain at large is under stress according to the New York Times Walmart is adjusting its flight rules to keep up about 10 percent of the giant rolls of paper that are used to make the toilet paper soda in the u.s. stores come from China and India these imports have now been delayed because of the broader bottleneck of shipments from Asia other products such as seafood apple juice and garlic are heavily sourced from China and are likely to take a hit as well according to the global port tracker report released on March 10th these supply challenges may have a longer and larger impact on US imports than expected even with Chinese producers now back online it doesn’t mean the crisis is past that’s because the crisis is a fundamental one of business relations and ethics as the world’s biggest a retailer Walmart’s huge reliance on Chinese imports goes way back in 1996 war Mart began its radio operation in China through a joint mentor agreement with the help of cheap labor costs and government subsidies in China warm-up began competing directly on its own shelves with its national household brand suppliers how did this happen as CPAC 2020 Kurtis Alice chair of America first policies told me this Walmart was one company one retailer that controlled such a huge part of the American retail market mass merchandising that they could go to any producer somebody producing catalogs gym lockers notebooks for schools clothing whatever whatever people buy and wear and they say okay sell to us if you if if we if you sell to us we’ll be able to sell to the entire nation of America and you won’t need any other customers and you won’t need to be you don’t have to worry about anything else then everybody thought what a great idea I want to sell to Walmart my book might my homework is done I’m home free but then Walmart would say okay well this is the price we’ll pay we want to sell it at you know X price retail so we’re gonna pay you one-half X price and if you can’t produce it at that price in your little factory in Sheboygan Wisconsin I know somebody in Shenzhen China that will and so Walmart helped outsource American industries to China so it’s this concentration where you had one buyer in America that could dictate to a thousand different businesses in America what they should be producing and selling for and that one buyer in America could then move production for a thousand companies over to China so we had a concentration in consolidation in America which then on a global level led to the consolidation and concentration in China and that’s the danger so to unwind this we now see that Walmart and the big retailers in America see the danger of dependent on China but we’re going to have to now allow a thousand companies

in America to flourish and we’re going to have to think about is it good to have just one mass merchandise retailer in America or three according to an epi report Walmart was responsible for eliminating 200,000 US drops in total from 2001 to 2006 the process is virtually the final step in America’s surrender to a China centric business model in light of the corona virus pandemic more and more people are now saying the time has come for the u.s. to distance itself from China economically industrially and strategically will this happen and if so in how long we cannot be sure except for one thing if the nation continues to finance the Chinese communist regimes unfair trading systems our economy and health security will be in peril thanks for watching zooming in I’m Simone Gao see you next time you