Chinese Communist Party (CCP) expands control of global supply chains
Doctor Antonio Graceffo, professor of economics and China economic analyst, in an article entitled: “China’s Control of Global Supply Chains Will Extend to the Sea, Moon,” mentioned that the CCP is increasing its control over the global supply chain.
Antoni said that nearly all electronic equipment depends on China no matter where it is manufactured.
When it comes to supply chains, all roads lead to China, even if products are “made” elsewhere. A laptop sold in the United States, labeled “Made in China,” is assembled in China, and many components are also sourced from China.
Some laptop brands advertise themselves as “not made in China,” but it also depends on China. A typical laptop computer contains many elements sourced from countries worldwide but controlled by the CCP: graphite, cobalt, lithium, chromium, vanadium, magnesium, antimony, and copper.
China supplies or controls half of the raw materials used worldwide. Graphite used in rechargeable batteries is found in China, Mexico, Canada, Brazil, and Madagascar, but 69% comes from China. Cobalt originated in the Democratic Republic of Congo (DRC), where Beijing controls 35 mining companies. China holds 86% of the global magnesium supply, although the element can be found in the United States, Israel, Brazil, Russia, Kazakhstan, and Turkey.
90% of the world’s lithium comes from Chile, Argentina, and Australia. China now controls 59% of global supply through investments in local companies. Developing countries are giving up their resources in exchange for Chinese cash. In Australia, China currently owns 91% of all lithium mining and 75% of the country’s reserves.
Two of the significant sources of vanadium are Kazakhstan and South Africa, both of which are members of China’s Belt and Road Initiative (BRI, also known as “One Belt, One Road”). In Kazakhstan, the China Development Bank (CDB) heavily funds the mining sector. And in South Africa, Beijing is now planning to invest in vanadium mines.
Chinese companies also buy significant stakes in the largest copper mines in DRC. China owns 30 overseas copper projects in the operation stage, and another 38 projects are in the exploration stage.
In addition to investing in other countries, China is currently vying for dominance in a newer area of undersea and lunar mining.
What is the purpose of the CCP’s increased control of the global supply chain?
Increasing the dependence of countries around the world on China
Former U.S. Navy Captain Stu Cvrk, in an article entitled “The Chinese Regime Aims to Influence and Control All Human Endeavors” mentioned that Beijing had succeeded in gaining control of the strategic items for many years. Beijing is also accumulating strategic reserves, both as a hedge against inflation and as a means of manipulating markets to influence the countries it targets.
Strategic goods are raw materials or agricultural products that are important to a country’s economy. Therefore, the economy will be significantly affected if trade activities and strategic goods supply are disrupted.
The city government of Chengdu, capital of Sichuan province, told a local newspaper that it “could turn the crisis into an opportunity to strengthen the confidence and dependence of all countries around the world on “Made in China” products. Implying that, as long as the CCP grasps the global supply chain, other countries will have to depend on the CCP.
For example, China is the dominant global supplier of pharmaceuticals and the largest supplier of medical equipment in the United States, including such equipment as MRI machines, surgical gowns, and devices measuring oxygen levels in the blood.
The supply of these essential products is still ongoing. Still, if China is unable to supply such equipment to the United States, thousands of Americans could die. This is entirely possible and should raise alarm bells for the United States and the world about the dangers of depending on Chinese goods.
Replace the “Made in USA” brand with “Made in China”
Stu Cvrk also said that, since 2013, the Chinese Communist Party (CCP) under the leadership of Xi Jinping has diligently pursued two strategic initiatives to build a colonial empire on the Chinese Mainland worldwide and bring China to global leadership: “Belt and Road Initiative (BRI)” and “Made in China 2025.”
Initially, the CCP implemented the “dual circulation” model. The goal is to make the Chinese economy less dependent on advanced foreign technology and supply chains. Chinese companies will become independent after ‘learning foreign know-how’ (which is essentially stealing), thereby actively creating products popular worldwide in domestic China.
For example, in 2009, Sony Bravia televisions were advertised as “Made in China,” but in reality, most of their parts were made by companies that weren’t from China. By 2017, one of the best-selling TV lines was the TCL S-Series, primarily manufactured by parts belonging to the Chinese company. This means that the CCP has gradually no longer depended on technological products from abroad. They were able to manufacture their high-tech products.
After that, the CCP started monopolizing and controlling the world energy supply. The CCP understands that holding future energy supplies will give it essential geopolitical leverage. That is why they fully exploit their competitive advantage to dominate the worldwide energy production market. Controlling the world’s energy resources means controlling the world’s economies.
The next step is for the CCP to find a way to replace American brands with Chinese brands. This may seem like a simple competition, but the matter is much more complex and vital in reality. The reason is that every brand has an association with the place of origin, and the CCP will most likely use the big brands to exert cultural and psychological influence on shoppers.
Change the world economic order, take the CCP as the mainstay
The famous American China expert Michael Pillsbury in the book “The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower” analyzed, the CCP has a strategic plan. In the long run, that is in the 100 years since the CCP established the government, overthrew the world economy, the political order dominated by the United States, and claimed the world.
In the film “Combat without a sound” by the National Defense University of China, China demonstrated its malice to fight with the United States: In the process of carrying out its “great cause” to dominate the world, China “Of course, faithfulness comes with friction and struggle with the American hegemony system, this is a clash of the century that is not shaken by the will of man.”
This plan is sequentially embodied in the CCP’s five-year plans for slowly mastering the parts of the global supply chain that Stu mentioned in his article.
The CCP’s 11th and 12th Five-Year Plans encourage Chinese companies to invest abroad, which already includes financial commitments and support from Chinese state-owned banks. One of the goals highlighted in the 12th Five-Year Plan (2011-2015) is strengthening China’s position in metals.
We are coming to the 13th Five-Year Plan (2016-2020), “the decisive battle phase,” which seeks to control the global non-ferrous metal industry. This strategy, along with “Made in China 2025”, aims to significantly expand the CCP’s strategic and defense sectors, as well as science and technology. To this end, an action plan for China’s metal industry to achieve world power status was announced by the Ministry of Industry and Information Technology in October 2016.
The CCP’s Five-Year Plans, Made in China 2025, and achieving world status in metals all include directives for state-owned enterprises—funded by international banks business—to buy and control mines in resource-rich countries around the globe.
The CCP has controlled the most important raw material mines in the global supply chain and gradually moved towards its ultimate goal through such steps.
For example, the CCP controls the global production of electric vehicles by taking control of the chemicals needed to make batteries and manufacturing the cathode and anode, which are the core building blocks of lithium batteries-ion. Simon Moores, chief executive officer of Benchmark Mineral Intelligence, has called China’s control of the industry the “Global Battery Arms Race.” The CCP then constrained the global supply chain by dominating metal smelting and battery-grade chemical production, a dominance that limited the world’s ability to produce electric vehicles (EVs).
The trend of ‘shifting’ the global supply chain away from the CCP
The CCP’s ambition could not be realized.
Multinational companies are looking to reduce their reliance on China. Due to the effects of the COVID-19 pandemic and U.S. trade restrictions on Beijing, they are pushing to reduce their dependence on Chinese goods.
In 2019, China’s exports of 1,200 products accounted for 22% of the world’s export market share, down three percentage points from 2018, according to a new study by Baker McKenzie and consulting firm Economic Silk Road Associates. For consumer goods, the country’s global market shares fell four percentage points to 42%.
Washington has “targeted” Beijing with wide-ranging measures aimed at shifting U.S. companies’ supply chains that are dependent on China and thwarting ambitions to “become a global technology power” by Beijing.
On August 17th, Washington extended restrictions on semiconductor supplies to Huawei (introduced earlier this year) to cut nearly all chip shipments to the public corporation of this Chinese technology.
Anne Petterd, head of international trade at Baker McKenzie in the Asia Pacific, said that companies are looking to diversify their supply chains in the face of disruption caused by the pandemic. Geographies, building more “safety layers,” and monitoring them more rigorously.
Tech hardware companies (one of the most manufacturing-focused industries in China) have moved some production out of China over the past three years. For example, Quanta Computer, the world’s largest laptop contract manufacturer and a major supplier of cloud hardware to companies like Google, Amazon, and Facebook, has moved server production out of China to Taiwan and the United States.
Data compiled by Silk Road Associates shows that China’s share of worldwide exports of computers and tablets fell four percentage points to 45% in 2019. In the handset industry ( where China is even more dominant), its market share fell three percentage points to 54%.
Many researchers point out that the pandemic and the disruption it has caused to global supply chains (centered in China) are accelerating the transition.
Silk Road Associates CEO Ben Simpfendorfer said that supply chains built in China would be gradually replaced over the next 20 years, but things take time.