[ad_1]
WASHINGTON (Reuters) – China represents a "significant and growing risk" to the supply of vital materials to the US military, according to a new Pentagon-led report that seeks to strengthen US industries vital to national security.
PHOTO: The Pentagon in Washington, U.S., is seen from aboard Air Force One, March 29, 2018. REUTERS / Yuri Gripas / Photo File
The nearly 150-page report, seen by Reuters on Thursday ahead of its official release on Friday, concluded that there were nearly 300 vulnerabilities that could affect critical materials and components essential to the US military.
Reuters was first to report on the study's major findings on Tuesday.
The analysis included a series of recommendations to strengthen the American industry, including by expanding direct investment in a sector of the economy. The specific plans were listed in an unreleased, classified annex.
China was given heavy emphasis in the report. U.S. military applications. The report also noted China's global profile in the supply of certain kinds of electronics and chemicals used in U.S. munitions.
"A key finding of this report is that China represents a significant and growing risk to the supply of materials and technologies deemed strategic and critical to U.S. national security," the report said.
Relations with China are already fraught, with a tension between the world's two largest economies, adding to tensions over cyber spying, self-ruled Taiwan and freedom of navigation in the South China Sea.
The report could add to trade tensions with China, bolstering the Trump administration's "Buy American" initiative, which aims to help drum up trillions of dollars in the United States.
Vice President Mike Pence accused China on Thursday of efforts to undermine President Donald Trump ahead of the Nov. 6 congressional elections, saying that Beijing was "meddling in America's democracy."
Pence's comments echoed those of Trump himself in remarks to the United Nations last month, when Trump said that "China has been attempting to interfere in our upcoming 2018 election." Chinese officials rejected the charge.
The report also examined U.S. shortcomings that contribute to a weakness in the domestic industry, including roller-coaster U.S. defense budgets that make it difficult for U.S. Another weakness cited in U.S. science and technology education.
"Although they are not likely to move markets, they present an alarming picture of U.S. industrial decay driven by both domestic and foreign factors," wrote defense consultant Loren Thompson, who has closed the doors to Boeing Co and other companies.
A senior U.S. official administration, speaking to reporters on condition of anonymity, cited several new steps to ensure U.S. military's supplies. These include an effort to build up a stockpile of lithium-ion batteries and expand U.S. capabilities in lithium-ion batteries that are critical for anti-submarine warfare.
"There have just been market failures here. And so we can create new incentives to drive investment in areas to help diversify ourselves, "said Eric Chewning, deputy assistant secretary of defense who oversees industrial base policy.
CHINESE DUMPING
Pentagon officials see national security risks from Beijing's growing military and economic clout and want to be sure China is not able to hobble America's military by cutting off supplies of materials or by sabotaging technology it exports.
The report noted that 90 percent of the world's printed circuit boards are now produced in China, presenting a risk to U.S. defense.
"With the migration of advanced offshore boarding, the Department of Defense," said the report.
The Pentagon has long fretted that "kill switches" could be embedded in transistors that could turn off sensitive U.S. systems in a conflict. The report cited the risk of "'Trojan' chips and viruses infiltrating U.S. defense systems."
U.S. intelligence officials also warned this year about the possibility China could use Chinese-made mobile phones and network equipment to spy on Americans.
The report cited what it was said to be unfair and unlawful Chinese efforts to undermine U.S. industry through a host of strategies, including by subsidizing exports at artificially low prices and stealing U.S. technology.
The report identifies multiple cases where the sole remaining U.S. producer of critical materials on the verge of shutting down and importing lower-cost materials "from the same foreign producer county who is forcing them out of domestic production."
Reporting by Phil Stewart and Mike Stone; editing by Sandra Maler, G Crosse and Leslie Adler
