Biden has made another insidious move to set up the "White House Supply Chain Resilience Committee" to keep an eye on China!

Author: Lu Yan

On June 14, local time, U.S. President Joe Biden issued an executive order to formally establish the "White House Supply Chain Resilience Committee" and deploy specific tasks. The executive order requires the commission to conduct supply chain reviews of industries critical to U.S. national security or economic security, and to submit its first comprehensive review report by December 31, 2024, and follow-up reports every four years thereafter, including guidance on U.S. cooperation with allies and strengthening global supply chain resilience strategies.

The White House Supply Chain Resilience Council is co-chaired by current U.S. National Security Advisor Jake Sullivan and National Economic Advisor Brainard, and includes the heads of the U.S. government's departments of agriculture, commerce, defense, energy, transportation, and intelligence, as well as the U.S. Secretary of State and U.S. Trade Representative.

The purpose of the committee is to push the U.S. government to take steps to "strengthen the resilience of long-term supply chains and the competitiveness of U.S. industry; identify and provide a coordinated response to address supply chain insecurity, threats and deficiencies, such as the concentration of supply chains in certain geographic locations, or excessive concentration of suppliers." The committee met for the first time on November 27, 2023, to deal with issues such as supply chains disrupted by the pandemic at the time, as well as inflation.

Some analysts have pointed out that the above-mentioned actions of the Biden administration are not only a continuation of the US National Strategy for Global Supply Chain Security issued during the Obama and Biden (then vice president) era in 2012, but also a continuation of the 100-day supply chain review promoted by Biden when Biden was officially elected president of the United States in early 2021.

Whatever action is taken, the real purpose is to reinvigorate the United States' strong chain dominance in the global supply chain and promote the institutionalized decoupling and containment of China's technology supply chain.

What is the purpose of the White House Council on Supply Chain Resilience?

The White House Supply Chain Resilience Committee was established and held its first meeting as early as November 27, 2023. The Biden administration's decision to issue an executive order on the supply chain resilience committee, six months after announcing the establishment of the Supply Chain Resilience Committee, while deploying specific tasks, highlights the importance and anxiety that Biden and his administration attach to supply chain issues.

U.S. President Joe Biden believes that the U.S. needs resilient, diverse, and secure supply chains to ensure economic prosperity, public health, and national security. Biden noted that the characteristics of resilient supply chains include: more domestic production; Have a diverse and flexible supplier base; Critical infrastructure with a reliable transport system and safety; sufficient inventory; secure and reliable data network; reliable food systems; and a world-class, globally competitive U.S. manufacturing base and workforce.

Biden also declared that the United States will work closely with "allies and partners who share the same values" to build the resilience of global supply chains to promote collective economic and national security, encourage innovation, and strengthen the ability to respond to and recover from international disasters and emergencies.

Some analysts believe that Biden's issuance of the executive order is just a new bottle of old wine, with the intention of achieving three purposes:

1. By strengthening policy coordination and cross-departmental cooperation, comprehensively assess and identify the weaknesses and risks in the U.S. supply chain, and provide the necessary legislative basis and policy tools for the strengthening of the U.S. supply chain. At the same time, it is used to publicize the Biden administration's achievements in the field of "supply chain security" and win the favor of voters.

2. The executive order was issued at the time of the G7 summit, trying to demonstrate to US allies the Biden administration's determination to reshape supply chains, and then mobilize allies to build a US-led global supply chain pattern.

3. Expand the Biden administration's toolbox to accelerate the "decoupling and breaking of the chain" with China, counter China's dominance in global trade and supply chains, and curb China's influence in the global economy by improving the resilience of the U.S. supply chain.

Origins and related responses to supply chain anxiety in the United States

1. The origin of the supply chain anxiety of the U.S. government.

As for the source of the US government's supply chain anxiety and why it continues to introduce "new orders" in the supply chain to promote "decoupling and breaking the chain" with China, some experts have analyzed and pointed out that there are three reasons:

1. The United States believes that its dependence on China's imports of "critical minerals" in its high-tech industries poses a major threat to its national security. The United States imports half of its annual consumption of 31 minerals, and imports 14 minerals entirely, with China being the main importer.

2. The raging pandemic has exposed the fact that the domestic supply chain in the United States is not resilient and broken.

More than 70% of the API production in the United States has been transferred abroad, and due to poor transportation, there is a shortage of anti-epidemic goods and daily goods for the people, resulting in a serious anti-epidemic failure and low government satisfaction.

3. Playing the supply chain card will help boost Biden's political capital.

Biden proposed "reshoring of manufacturing" and "Made in America" during his election campaign, and if he can complete the risk review of the supply chain of key industries in the United States, promote the localization of the supply chain, and promote the recovery of the American economy, it will be the fulfillment of his campaign promises. In the face of the 2024 election and Trump's race, Biden and his administration's desire to win voter support by playing the "decoupling and breaking the chain" card is becoming more and more urgent.

2. Promote measures related to "decoupling and breaking chains" with China.

There is a view that the executive order issued on June 14 is a move by Biden and his U.S. government to accelerate the reshaping of the supply chain to China, in exchange for more campaign political capital. In fact, since the Trump era, the U.S. government has introduced a number of decoupling policies with China in the fields of trade and investment, communication technology supply chain, pharmaceutical supply chain, and advanced manufacturing supply chain. After the Biden administration came to power, it basically followed Trump's policies.

In contrast to Trump's one-man style, the Biden administration has responded to the alleged impact of supply chains from China by enlisting the support of allies and partners, encouraging investment in the United States, bringing manufacturing back to the United States, and enriching and improving American supply chains.

Since January 2021, the Biden administration has successively introduced a series of decoupling and containment policies against China. The Biden administration has also strengthened overall competition coordination with China through the G7, the Quadrilateral Organization of the United States, Japan, India and Australia, the AUKUS alliance of the United States, the United Kingdom, Australia and the United States-Europe Trade and Technology Council, the trilateral cooperation between the United States, Japan and South Korea, and the Indo-Pacific Economic Framework.

What is the impact on China?

The United States' systematic promotion of decoupling and breaking the chain with China will undoubtedly impact the fragile global economy. World Trade Organization Director-General Ngozi Okonjo-Iweala warned during the 2023 World Economic Forum that trade decoupling would cost about 5% of global GDP if it happened.

With the comprehensive escalation of the U.S. trade war and technology war with China, the U.S. policy of "decoupling and breaking chains" and "small courtyards and high walls" will undoubtedly bring systemic and global challenges to China's economy.

Industry experts pointed out that for a long time, in the process of promoting opening up and integrating into global development, China has prioritized efficiency, quality and cost, but lacked systematic consideration of supply chain security. At present, China is promoting high-level opening-up and advocating the building of a community with a shared future for mankind, and it is necessary to accelerate the promotion of a global-oriented national supply chain strategy.

How should China respond?

Industry insiders pointed out that the decoupling and containment of China's supply chain by the United States has entered the stage of institutionalization and legalization, while China is still in the stage of following in the design of the supply chain system; In terms of institutional design, it is necessary to accelerate the establishment of a national supply chain promotion and security policy and regulatory system based on the socialist market economy. To this end, China needs to strengthen its independent innovation capabilities and reduce its dependence on foreign technology.

1. Strengthen international cooperation and exchanges to stabilize China-US relations. On the basis of adhering to principles, we should seek to resolve differences through dialogue and diplomatic channels, avoid conflicts and confrontations, and provide a stable external environment for economic development.

2. Innovate and implement modern supply chain engineering. Summarize the pilot work experience of supply chain innovation and application, carry out the national supply chain innovation and application demonstration creation, cultivate a number of demonstration cities and demonstration enterprises, sort out a number of typical cases of supply chain innovation and development, and promote the innovation of supply chain technology, standards and service models.

3. Improve the overall level of the manufacturing supply chain. Improve the manufacturing supply chain service system, and promote manufacturing, raw material supply, logistics and other enterprises to strengthen strategic cooperation at the supply chain level. Establish a manufacturing supply chain evaluation system and a global supply chain risk early warning system for important resources and products. Improve the intelligent level of the manufacturing supply chain, build a digital supply chain service system with the industrial Internet as the core, and deepen the application of the industrial Internet identification analysis system. Select a number of industries with strong competitiveness and high degree of globalization, dig deep into digital application scenarios, and carry out digital innovation and application demonstration projects in the manufacturing supply chain.

Attached: The main content of the U.S. measures to strengthen the global supply chain

The measures announced by the Biden administration to strengthen the U.S. global supply chain mainly include the following actions:

manufacturing more essential medicines in the U.S. and alleviating drug shortages, investing in domestic manufacturing of essential medicines, medical countermeasures, and key areas critical to national defense; Released a new report on pharmaceutical supply chain resilience to reduce reliance on high-risk foreign suppliers.

Establish new cross-departmental supply chain data sharing capabilities, build a new first-of-its-kind supply chain hub, integrate industry expertise and data analytics efforts, develop innovative supply chain risk assessment tools, and coordinate in-depth analysis of selected critical supply chains to drive targeted actions to improve resilience. Bringing together U.S. supply chain stakeholders through the Freight Logistics Optimization Engineering Program to co-create a supply chain network picture to avoid bottlenecks, reduce lead times, and build a more resilient and globally competitive freight network with early warning of supply chain disruptions.

Funding advanced energy manufacturing and recycling grant programs, including the production of critical materials, grid-scale battery and electric vehicle components, onshore wind turbines, and energy-efficient technologies, revitalizing communities affected by coal mine or coal-fired power plant closures, and promoting domestic production of advanced batteries and battery materials in the United States.

Invest in strengthening domestic food supply chains, create more opportunities for farmers and entrepreneurs in states, increase farmer incomes, and reduce food costs by investing in diversified food processing, resilient agricultural markets, and fertilizer production.

Publish a Defence Industry Strategy to guide engagement, policy development and investment in the Defence Industrial Base over the next 3 to 5 years, ensuring a coordinated, whole-of-government policy for the multi-tier suppliers that make up these critical supply chains.

Develop a smart manufacturing plan, fund research from national scientific, engineering, and medical schools, develop a national smart manufacturing program, and identify key investment priorities to support new digital and artificial intelligence technologies to improve the productivity and safety of manufacturing systems.

Establish a new Resilience Center and conduct supply chain disruption exercises to ensure critical infrastructure and supply chain resilience needed to provide essential services to the American people, including addressing supply chain risks caused by threats and vulnerabilities within U.S. ports. Promote at least two deductions within 2024 to test the resilience of cross-border critical supply chains; Further implementation of the CHIPS and Science Act.

Establishment of the Intermodal Transport Office, with the establishment of the Intermodal Freight Infrastructure and Policy Office by the Ministry of Transport, which will be responsible for maintaining and improving the condition and performance of the national multimodal freight network, including through the development of the national multimodal freight network, the review of the national freight plan, and the promotion of freight logistics optimization projects.

Advance the monitoring of climate impacts, the global climate change associated with El Niño, and its impact on U.S. and global commodity prices and agricultural and fishery production, disruption to global and trade supply chains, and consequently impact on food security, human health, and social instability.

Prepare the energy and critical minerals supply chain by developing assessment tools to track risks and opportunities across the energy supply chain; Mapping and development of geospatial databases for global critical product supply chains to assess the likelihood of trade disruptions to specific critical minerals and materials.

Enhance defense supply chain analysis and risk management by creating supply chain analytics tools that analyze supplier data for weapons systems to improve supply chain manageability for the development of defense industry-based wargame scenarios to identify vulnerabilities and develop mitigation strategies.

Host a Supply Chain Data & Analytics Summit to invite experts to provide input on supply chain risk assessment models and tools, and to assess data availability, utility and limitations, and discuss actions to improve data flow.

Host an "AI Hackathon" to strengthen the critical minerals supply chain to develop new AI methodologies for the evaluation of domestic critical mineral resources.

Strengthen cooperation with the European Union, Japan, and South Korea to establish an early warning system for semiconductor supply chain disruptions, identify priority products and materials such as critical minerals and rechargeable batteries, and establish mechanisms to quickly share information on critical supply chain disruptions.

Strengthen cooperation with Mexico and Canada to establish a trilateral emergency response subcommittee to coordinate North American efforts to maintain regional trade flows in emergency situations.

Strengthen collaboration with Australia, Canada, the European Union, Japan, the United Kingdom and WHO to discuss ways for partners to address drug shortages.

Strengthen cooperation with global partners to improve the capacity of countries and regions to observe weather, water and climate, and share data.

signed the Indo-Pacific Prosperity Economic Framework Supply Chain Agreement and established a Supply Chain Committee to coordinate actions; Establish a crisis response network that enables partners to better respond to supply chain disruptions through emergency communication channels and joint crisis simulations.

Strengthen the Partnership for Economic Prosperity in the Americas, strengthen and diversify supply chains, with a focus on key sectors such as semiconductors, clean energy, and medical supplies.

Host the North American (USCANA-Mexico) Leaders' Summit to enhance the resilience of North American critical minerals, semiconductors, and other essential supply chains, including by partnering with regional industry and academia to create high-quality jobs, promote investment, develop talent, and foster innovation.

Build global infrastructure and investment partnerships, mobilize public and private investment, and develop transformative economic corridors to diversify global supply chains and create new opportunities for U.S. workers and businesses. Cross-regional connectivity through the Lobito Corridor and the India-Middle East-Europe Economic Corridor to facilitate trade and secure clean energy, digital, food and other critical supply chains.

Establish the Partnership for Mineral Security and work with partners such as Australia, Canada, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the United Kingdom and the European Commission to develop marine spatial planning to accelerate the development of diverse and sustainable supply chains for critical energy minerals.

Creation of the International Fund for Technology Security and Innovation, cooperation with countries to create the most attractive economic environment for private investment, creation of a semiconductor trading network.