On April 25th, Commanding Heights Executive Director Dr. Jeb Nadaner participated in a panel discussion titled, “The Broken Chain: Building Robust, Resilient & Reliable Supply Lines,” conducted at the Observer Research Foundation (ORF) Raisina Dialogue, the premier multilateral economic and security conference in South Asia.
The SAFE Commanding Heights paper, “Building China Resistant Supply Compacts,” starts on page 20 of the Raisina Files, an annual ORF publication.
Dr. Nadaner’s opening panel remarks as delivered:
The same supply chains that feed EVs — batteries, rare earth magnets, electrical and communications devices, semiconductors, and industrial materials like aluminum and titanium — go into military systems and critical infrastructure. Our economic and national security lifelines are overlapping.
The strategic challenge is that so much of the supply chain for this next generation of transportation – among so many other critical products and materials – is either in or controlled by China.
The question for the U.S. and our Indo-Pacific friends is: just what are we going to do about it?
Traditional trade and industrial tools have become inadequate, if not irrelevant, to the challenge’s scale. China’s approach to outmaneuvering foreign competitors, with abusive illegal practices, has stood impervious to change.
It is time to consider a more realistic alternative: In place of an all-encompassing global trade regime that takes years if not decades to negotiate, groups of nations can fashion rapid arrangements to govern the supply chains that matter most.
The groupings can be regional, values-based, and driven by national and economic security concerns. The common thread of these multinational arrangements is enhancing domestic production and curbing Chinese market power.
The natural starting point for generating new, China-resistant supply chain arrangements is the automotive sector. Perhaps no industry is more important to China’s economic ambitions. Indeed, it is a prerequisite to being a first-order industrial power, requiring large-scale component manufacturing facilities, a wide array of materials, services, and R&D investments.
Even as negotiations start on the Indo-Pacific Economic Framework (IPEF) which will take years —our governments and private sectors could simultaneously pursue a more modest approach aimed at quicker results to address China’s EV challenge.
To get started the US and India could call for a meeting of the Quad members, the National Technology & Industrial Base, and a couple of others (consisting of the US, India, Australia, Canada, Japan, Britain, Taiwan, and Korea). Each country would signal business that it will incentivize made-out-of-China supply chains. The aim is to incentivize the entrepreneurial forces in the market to fashion new non-Chinese arrangements with one another.
This EV initiative could evolve over time into a trading compact consisting of most of the high-technology industrial democracies in Asia, North America, and eventually, Europe – a “G7 plus,” which together command around half of global GDP.
These nations would work according to a limited number of basic common standards that would provide a level playing field among them — while disadvantaging, if not excluding, entities controlled or supported by China.
The idea is to advance robust, resilient, and reliable supply chains in an industry we cannot afford to lose. We, like-minded countries, can break out of the structures and dependencies on China in which we find ourselves, and build economic prosperity for people and national security for nations.