For US to counter China effectively, Pentagon must reform, warns first-of-its-kind report

Declining industrial base, supply-chain constraints and outflow of weapons to Ukraine said to have left America vulnerable amid bureaucracy
Pentagon urged to team up with Indo-Pacific allies and partners to counter China, as US has done with Nato and others to assist Ukraine

US-China relations

Mark Magnierin New York

Published: 8:35am, 12 Jan 2024

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The sprawling Pentagon, with its lengthy decision-making process, lumbering weapons-building and legacy of over-designing items that private companies can produce for less, is in dire need of reform if Washington wants to counter Beijing’s “pacing challenge”, a senior US defence department official warned on Thursday.

The US on Thursday released its first National Industrial Defence Strategy, acknowledging that a declining industrial base, supply-chain constraints and the outflow of weapons to Ukraine have left America vulnerable as companies supplying the Pentagon face mounting frustration over its lumbering pace.

“We know that it’s not easy always to work with the Department of Defence. Many of you in the audience tell me that regularly,” said Laura Taylor-Kale, the US assistant secretary of defence for industrial base policy, a newly created position.

“Well, we’re here. So what is it that we need in order to move forward? What is it that we need in order to be able to really build the industrial ecosystem that we need, that our warfighters need, in order to meet the pacing threats and current challenges?”

The US lags China and Russia in developing highly manoeuvrable hypersonic weapons. Photo: Shutterstock

Taylor-Kale said a number of factors had jarred Washington into realising how vulnerable its military logistics system is.

These included the coronavirus pandemic as well as China’s strong position in lithium processing needed for electric vehicles and other green technologies.

Another is Beijing’s recently imposed export restrictions on gallium and germanium, key components in many electronics.

In addition, stockpiled weapons sent to Ukraine to counter Russia’s invasion will take several years to replenish even as the US has lagged in developing highly manoeuvrable hypersonic weapons that Beijing and Moscow have already deployed.

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“As many of us have analysed the Chinese industrial base, the US’s pacing threat, the main global competitor, it is moving swiftly, building weapons systems in preparation for a possible war with the United States,” said Seth Jones of the Centre for Strategic and International Studies, a Washington-based think tank.

“So the defence industrial base is an essential aspect of deterrence as much as it is for warfighting.”

The report also called on the Pentagon to bolster safeguards against strategic Chinese investments – so-called adversary capital – that threaten to increase US vulnerability. It urged venture-capital injections to jump-start poorly financed defence contractors.

“We’ve highlighted the importance of adversarial capital and the effects that it has on the industrial base, particularly predatory investments in acquisition practices,” Taylor-Kale said.

An aerial view of the Pentagon, headquarters for the US Department of Defence, located outside Washington DC. Photo: Reuters

America’s industrial base consolidated over a generation, the report stated, fuelled by the end of the Cold War, an economic shift of manufacturing to China and other overseas locations and the merging of key companies in the name of efficiency.

The US “will require another generation to modernise”, it warned.

The strategy also recommended that the Pentagon team up with Indo-Pacific allies and partners to counter China, as Washington has done with the North Atlantic Treaty Organisation and others to assist Ukraine.

“We can’t afford to wait. We have seen over the last few years, the importance of why we need resilient supply chains,” said Taylor-Kale.

The importance is not just for “us domestically, but also for our close allies and partners”, she added. “We think that the time for action is now.”

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The 60-page report covered principles and generalities at length and few specifics, Taylor-Kale noted, saying this was partly intentional to offer a broad framework that could be applied later to specific theatres and weapons systems as they evolve.

“We may not know what kind of batteries we need, but we know we’ll need lithium,” she said. “We know critical minerals and strategic materials will continue to be very important.”

The Pentagon also called for production, investment and capacity increases, more stockpiling and greater cooperation with allies, including members of the Aukus alliance, a security pact comprising Australia, Britain and the US.

The idea is to boost weapons production and better integrate weapons systems from artillery and cyber tools to hypersonic weapons.

Working with close allies to make more weapons abroad was imperative, the report stated, and should be pursued by “developing, growing, and sustaining multiple, redundant, production lines across a consortium of like-minded nations”.

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The Chinese embassy in Washington slammed the report’s focus on China.

“The China-related content of the National Defense Industrial Strategy hypes up major-power competition, zero-sum game,” said spokesman Liu Pengyu. “It aims to smear China with its Cold-War mentality. The sole purpose is to contain and suppress China’s development and maintain the US hegemony. China deplores and rejects this.”

The Pentagon strategy paper also said the US needed to attract more young people into manufacturing as older workers retire, including by removing the stigma that blue- collar work was dirty and unappealing, perhaps by appealing to their patriotism.

“I’d like every kid who loves building Legos [to] think about a job in the defence industry,” said Cynthia Cook, a senior fellow at CSIS and adjunct professor at the Pardee Rand Graduate School in California.

Separately on Thursday, Ely Ratner, US assistant secretary of defence, and Admiral John Aquilino, US Indo-Pacific commander, briefed the Senate Armed Services Committee during a closed-door session in Washington.

“Failure to maintain deterrence against China and North Korea would be catastrophic for American national and economic security,” said Rhode Island Democrat Jack Reed, the committee’s chairman, and Mississippi Republican Roger Wicker, its ranking member, in a joint statement.

“Today’s sobering briefing provided evidence for why bipartisan efforts to tackle these challenges must be a top priority,” they added.