“The government of China is capable of leveraging its dominant positions in key global supply chains in an attempt to accomplish its goals, although probably not without significant cost to itself,” the report said.
That could be a particular danger if China is able to take over Taiwan, another leading contributor to industrial and technology components, it said.
China seizing Taiwan “probably would have wide-ranging effects, including disruption to global supply chains for semiconductor chips because Taiwan dominates production of cutting-edge chips,” it said.
The disruptions of the Covid-19 pandemic showed the world the importance of supply chains — the way components of products make their ways from myriad sources around the world through various countries for preliminary and final assembly before products reach the market.
The pandemic demonstrated how the disruption of a single factory in China or elsewhere could halt the work of major industrial operations around the globe.
The “Annual Threat” report singled out China's dominance in technology sectors including semiconductors, critical minerals, batteries, solar panels, and pharmaceuticals.
It pointed to an April 2020 speech by Chinese President Xi Jinping, who said China sought to increase control of key supply chains to be “able to use those supply chain dependencies to threaten and cut off foreign countries during a crisis.”
“China's dominance in these markets could pose a significant risk to US and Western manufacturing and consumer sectors if the Government of China was able to adeptly leverage its dominance for political or economic gain,” it said.