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US to develop China-independent supply chains with support from allies
24.02.2021 [08:46],
Alexey Razin

With the coming to power in the United States of Joseph Biden, the course taken by his predecessor to isolate economic processes in opposition to China will be continued. The Americans chose Taiwan, Japan, South Korea and Australia as their allies. The reforms are designed to reduce the dependence of the American economy on China.

Image source: Reuters

The degree of this dependence in certain areas is very high, as the Nikkei Asian Review recalls. For example, for some types of medical devices, the United States is 90% dependent on Chinese imports, for rare earth minerals — by 80%. Along the way, the American authorities want to develop the production of semiconductor components in the country, since in 1990 the United States occupied 37% of the market, and now its share has decreased to 12%. Boston Consulting experts expect that by 2030 the PRC will be able to produce on its territory up to 24% of all semiconductor components.

As noted by a Japanese source, the new US administration is now developing legislation that will determine the development of a supply ecosystem, excluding the dependence of the United States and allies on China. The law will affect interests in the production of semiconductor components, traction batteries for electric vehicles, supply and processing of rare earth metals, medical products.

The United States intends to create a system of supply of critical components that would allow, if necessary, to transfer forces from one direction to another, while eliminating dependence on the PRC. In any case, US foreign policy allies will be advised to reduce their interactions with Chinese companies under this initiative.

Australian mining company Lynas has already been involved in the construction of a processing plant in Texas that will reduce US dependence on China for the supply of rare earths. Construction funded by the US Department of Defense. It is noted that TSMC’s enterprise for contract manufacturing of chips in Arizona will also not do without government subsidies. In the traction battery segment, Chinese suppliers are also gaining strength, so American companies will try to cooperate with Japanese and South Korean suppliers.

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