How China Holds US Military-Industrial Apparatus “By the Balls”
Janet Yellen is visiting China to try to minimize the damage to the bilateral trade relations between the USA and Beijing, also because, as we will see later, still today and for a long time in the future, the American military and industrial apparatus is heavily dependent on from Chinese supplies.
Raytheon CEO Greg Hayes admitted that Beijing effectively has the US military's supply chain "by the balls" thanks to its reliance on rare earths and other materials that come from or are processed in China.
According to Hayes, Raytheon, which produces a large part of US missiles, has "several thousand suppliers in China", so "decoupling … is impossible". “We can de-risk but not separate,” he told the Financial Times, adding that he thinks that is the case “for everyone”.
“Think of the $500 billion in trade that goes from China to the United States every year. More than 95% of rare earth materials or metals are sourced or processed in China. There is no alternative,” Hayes continued, adding, “If we were to withdraw from China, it would take many years to re-establish that capability domestically or in other friendly countries.”
This is hilarious. The boss of Raytheon, one of the US top weapons manufacturers, says the company has “several thousand suppliers in China and decoupling . . . is impossible”.
We need China to fight China… Actually good news, makes war less likely. https://t.co/HngUrIBwAv
— Arnaud Bertrand (@RnaudBertrand) June 21, 2023
Hayes' comments underscore the difficulties facing Western manufacturers as a result of growing friction between China and the United States and its allies.
Beijing in February imposed new sanctions on both Raytheon and its US defense colleague Lockheed Martin for supplying weapons to Taiwan. Hayes was also sanctioned.
The sanctions have had little commercial impact as the groups are not allowed to sell military equipment to China. Raytheon, however, has a substantial commercial aerospace business in the country through its engines subsidiary, Pratt & Whitney, and aviation systems and cabin equipment specialist Collins Aerospace. It has about 2,000 direct employees in China. -FT
Hayes said the company is trying to "take some of the most critical components and have a second source, but we're not in a position to pull out of China like we've done with Russia."
Added to those sanctions are the restrictions imposed on the export of gallium and germanium, essential products for US microchips, which in turn are indispensable for modern weapons.
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The article How China Holds the US Military-Industrial Apparatus "By the Balls" comes from Scenari Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/come-la-cina-tiene-lapparato-industrial-militare-usa-per-le-palle/ on Mon, 10 Jul 2023 13:00:06 +0000.