The U.S. chief of national intelligence issued an annual report stating that China will use its dominance in global supply chains as a weapon to increase its political and military power.

(Reuters file photo)

[Compilation Guan Shuping/Comprehensive Report] U.S. National Intelligence Chief Avril Haines (Avril Haines) published the "Annual Threat Assessment" report on the 8th, which warned that China will use its dominance in the global supply chain as an additional weapon to increase its political and military power.

The report pointed out that China occupies an important position in the global supply chain in the fields of semiconductors, key raw materials, batteries, solar panels and pharmaceuticals. pose significant risks to U.S. and Western manufacturing and consumer industries."

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The report points out that China is already using its dominant position in the supply chain to force foreign companies and countries to transfer technology and intellectual property to Beijing; using both economic and military power to gain regional and global influence.

"The Chinese government can use its dominance of key global supply chains to try to achieve its goals, though not without its own costs," the report said.

It would be particularly dangerous if China were able to seize Taiwan, "which could have widespread repercussions, including disrupting global semiconductor supply chains due to Taiwan's dominance of advanced chip production," he said.

In terms of semiconductors, the report said that China is a global leader in building new chip factories, and plans to build dozens of semiconductor factories by 2024, most of which will produce older, more mature technologies.

Although China accounted for only 11% of global semiconductor production capacity in 2019, it is expected to increase to 18% by 2025; China's difficulties due to export controls in Western countries have made it focus on lower performance, standardized chip technology, which may become The workhorse in this area has ultimately made some buyers more reliant on China.

In terms of key raw materials, the report pointed out that China's major position in the mining and processing of certain strategic raw materials such as rare earths is a major weakness for the United States. China can use its control over these key raw material markets to gain commercial advantages in limited quantities. Or as a tool in political or trade disputes.

Long-term disruptions to the supply of these Chinese-controlled raw materials will lead to shortages, affecting civilian and defense manufacturing in the United States and the West.

However, the report said that China's restrictions on the export of these key raw materials will also accelerate global coordination and the development of non-China-based alternative sources.

Other supply chain areas that worry the U.S. are battery, pharmaceutical and solar panel manufacturing.

Companies based in China are expected to control 65% of the global lithium battery market by 2025, with China dominating all links in this supply chain.

40% of the key "active pharmaceutical ingredients (API)" in pharmaceuticals are produced in China. In all stages of solar panel manufacturing, China's global market share has now exceeded 80%, and it will increase to more than 95% in the next few years.