As we previously reported, the U.S. DoD has embarked on a strategic transformation based on changes in organizational structure, putting nuclear once again at center stage, a renewed commitment to the U.S. and allied military capabilities in the Indo-Pacific region, strength through power in Europe (in the form of U.S. and NATO military capabilities), and the maintenance of superiority by the U.S. in conventional weapon technologies.
Central to this transformation are supply chains. Specifically, an understanding and reduction of the reliance by U.S. military systems on foreign components, subcomponents, materials, and software. Supply chain security concerns have also been reinforced by the Biden Administration’s Supply Chain Disruptions Task Force, which has recently delivered its final report. In the next year, supply chain security assessments are due for a variety of industry sectors.
“Made in America” is an objective, rectifying supply chain security concerns with American-made components, subcomponents, materials, and software. And technology will play a role in tracking supply chains and global commodities using multiple sources of data (geospatial, etc.) used to evaluate supply chain disruptions and security, all of which can be applied to military operations.
The prevailing problem for both DoD and the private sector is the transparency, openness, and subsequent vulnerability of American supply chains. Due to our decades of ‘heavy lifting” – building the post-war economic order and making the market inroads which became the global economy – we have global supply chain tentacles everywhere, with the subsequent dependencies and vulnerability.
The Chinese have the opposite problem: opaque supply chains, that will either remain problematic or cause unforced errors by the Chinese in their effort to construct a world-class military-industrial base on which to build 21st-century military superiority – just as the post-WWII American industrial economy was the foundation of 20th Century American military dominance.
Military-Civil Fusion (MCF)
As it turns out, supply chain transformation is a central military operational activity of the Chinese Communist Party (CCP) – and they want their supply chain to be “Made in America” too.
The CCP calls this effort Military-Civil Fusion (MCF). The Center for Advanced Studies (C4ADS) – a research NGO with a commitment to data-driven and evidence-based research and analysis of global threats worldwide – has applied their non-traditional investigative techniques and emerging analytical techniques to generate a report on these CCP defense supply chain efforts. According to the report (entitled Open Arms: Evaluating Global Exposure to China’s Defense-Industrial Base):
“Military-Civilian Fusion (MCF) seeks to harness the sophistication and output of China’s civilian economy for the benefit of defense supply chains. MCF is ushering Chinese companies into the defense economy…For MCF to succeed, the PLA and China’s defense apparatus must radically alter their opaque postures to operate in a market environment. MCF compels China’s defense supply chains to become increasingly transparent, creating visible indicators of participation in the defense economy that can be evaluated using publicly available information (PAI).” It is in these “increasingly transparent…visible indicators” where we should be looking for China’s unforced errors.
For the private sector, the threat is that the MCF effort fuses with the already established Beijing policy encouraging Chines companies “to innovate by acquiring and adapting foreign technology” – what they call IDAR: “Introduce, Digest, Absorb, and Re-Innovate.” MCF fused with IDAR presents a growing need for the public and private sector in the U.S. to further their vigilance to prevent the acquisition by the Chinese of “American Made” technologies when considering a supply chain partnership with Chinese entities.
For now, the C4ADS report has used this potential crisis as an opportunity to harness currently available PAI for an exhaustive analysis of activities that may speak to the inappropriate use of traditional commercial Chinese supply chains means to a military supply chain operational end. Again, from the report:
“To do so, the report analyzes China’s defense ecosystem and the activities and characteristics of Chinese companies participating in military supply chains by:
Mapping: China’s defense-industrial ecosystem using research by Chinese scholars, international experts, official Chinese media, and policy documents
Examining: 8,430 military procurement announcements for trends in the goods acquired by the Chinese military and offered by their suppliers
Analyzing: 65,727 import records and 429 investment transactions related to a sample
of 1,655 companies linked to China’s defense industrial base
Diving: Into three commercial networks in China’s defense-industrial base that exhibit multiple risk signals and have international partners”
The Executive Summary of the report highlights results the MCF and IDAR have already produced for the People’s Liberation Party:
- The case of China South Rail demonstrates how PAI can be used to trace how a commercial deal was co-opted for military purposes.
- The case of Beijing Highlander exemplifies how an openly pro-MCF company has historically developed technologies with international partners for the PLA Navy and continues to do so.
- The case of Bright Laser Technologies highlights how relationships within the defense industrial base can entail increased exposure to China’s defense supply chains.
Risk Signals: A C4ADS Risk Assessment Tool – and Action Items
For governments and companies alike, who do business with Chinese companies, this report is inventive and impressive and worth a further look. The report includes a risk assessment tool for use when considering a business relationship with a Chinese company. In their conclusion to the report, the authors also offer up the sources and methods used by the C4ADS to generate the report as an approach decision-makers should consider using to address this unique and very real military/industrial supply chain threat vector.
Direct Link to the C4ADS Report: Open Arms: Evaluating Global Exposure to China’s Defense-Industrial Base
Related Reading:
For further insights into the rise of great power competition and DoD strategic transformation efforts, see OODA Loop – What the C-Suite needs to know about a Return to “Great Power Competition” and DoD Capabilities (per the Congressional Research Service).
OODA Research Report: The Chinese Threat
This OODA special report investigates the capabilities and intent of the People’s Republic of China, with a special focus on the cyber domain. Our objective: to provide insights that are actionable for business and government leaders seeking to mitigate risks through informed decisions. See: OODA Research Report: The Chinese Threat
Black Swans and Gray Rhinos
Now more than ever, organizations need to apply rigorous thought to business risks and opportunities. In doing so it is useful to understand the concepts embodied in the terms Black Swan and Gray Rhino. See: Potential Future Opportunities, Risks and Mitigation Strategies in the Age of Continuous Crisis
Cybersecurity Sensemaking: Strategic intelligence to inform your decisionmaking
The OODA leadership and analysts have decades of experience in understanding and mitigating cybersecurity threats and apply this real world practitioner knowledge in our research and reporting. This page on the site is a repository of the best of our actionable research as well as a news stream of our daily reporting on cybersecurity threats and mitigation measures. See: Cybersecurity Sensemaking
Corporate Sensemaking: Establishing an Intelligent Enterprise
OODA’s leadership and analysts have decades of direct experience helping organizations improve their ability to make sense of their current environment and assess the best courses of action for success going forward. This includes helping establish competitive intelligence and corporate intelligence capabilities. Our special series on the Intelligent Enterprise highlights research and reports that can accelerate any organization along their journey to optimized intelligence. See: Corporate Sensemaking
Artificial Intelligence Sensemaking: Take advantage of this mega trend for competitive advantage
This page serves as a dynamic resource for OODA Network members looking for Artificial Intelligence information to drive their decision-making process. This includes a special guide for executives seeking to make the most of AI in their enterprise. See: Artificial Intelligence Sensemaking
COVID-19 Sensemaking: What is next for business and governments
From the very beginning of the pandemic we have focused on research on what may come next and what to do about it today. This section of the site captures the best of our reporting plus daily daily intelligence as well as pointers to reputable information from other sites. See: OODA COVID-19 Sensemaking Page.
Space Sensemaking: What does your business need to know now
A dynamic resource for OODA Network members looking for insights into the current and future developments in Space, including a special executive’s guide to space. See: Space Sensemaking
Quantum Computing Sensemaking
OODA is one of the few independent research sources with experience in due diligence on quantum computing and quantum security companies and capabilities. Our practitioner’s lens on insights ensures our research is grounded in reality. See: Quantum Computing Sensemaking.
The OODAcast Video and Podcast Series
In 2020, we launched the OODAcast video and podcast series designed to provide you with insightful analysis and intelligence to inform your decision making process. We do this through a series of expert interviews and topical videos highlighting global technologies such as cybersecurity, AI, quantum computing along with discussions on global risk and opportunity issues. See: The OODAcast
