We’re Too Dependent on China for Too Many Critical Goods. Especially Medicine.
During the Cold War, the Western alliance came together to create COCOM, the Coordinating Committee for Multilateral Export Controls, an export regime aimed at barring the sale of sensitive military and dual-use technologies to the Soviet bloc. The time has come to build its analog, an alliance committed limiting key strategic imports and exports to and from the People’s Republic of China. The coronavirus that originated in Wuhan, China, is at once a reason and an opportunity to begin a multilateral dialogue aimed at creating a partial trading bloc.
Over the last couple of years, the Washington consensus view on China has shifted 180 degrees. The nation whose transformation lifted hundreds of millions out of poverty and spurred serious calls for examination of a “China model”—authoritarian government married to managed capitalism—is now perceived by most political leaders as a strategic competitor at best, a dangerous enemy at worst. Setting aside the well-documented military challenge, since the Wuhan outbreak, the economic and health threats have come sharply into view.
Consider that Chinese firms are said to supply more than 90 percent of U.S. antibiotics, 70 percent of acetaminophen (that’s Tylenol), and almost half of the anti-coagulant heparin. “Are said to” because we struggle even to gather information on this because of the opacity of the Chinese market and state-dominated record keeping. Some studies suggest up to 80 percent of the basic ingredients in U.S. drugs come from the PRC. China is also the second largest exporter of biologics and the prime source of medical devices per the FDA. In some cases, it appears that India is a prime source of a key import – generics, for example – but that masks the fact that India sources up to 75 percent of its own pharma ingredients from China.
This makes no sense, economically or logically. Most individuals wouldn’t tolerate dependence on a single drug store for a critical, life-saving medication. Why would a nation? Much less dramatic but still potentially important is our dependence on China for some rare earth elements, used in mobile phones among other things. We have an indirect dependence even in technology, where our top firms waste no opportunity to say how much they need to sell to China in order to remain innovative. (This is a new plaint. Seismic innovation in the 1990s didn’t demand sales to the PRC.)