Video US must outcompete China's 'closed society' to win AI race, Rep Steil warns Rep. Bryan Steil, R-Wis., discusses the AI race between the U.S. and China, emphasizing the need to maintain our innovation edge and protect infrastructure against Chinese intellectual property theft to ensure national security.
The American economy is dangerously reliant on Communist China. Many in government and business know this, but hardly anyone has done anything about it.
One important step toward addressing this vulnerability is greater transparency. A petition recently filed with the Securities and Exchange Commission urges the agency to require publicly traded companies to disclose to shareholders the material risks created by deep supply chain dependence on China. Investors deserve a clear accounting of just how exposed corporate America has become.
This is no hypothetical exercise or war game. U.S. corporations have outsourced vital consumer production to a geopolitical rival that is openly committed to displacing America as the world’s leading power. China’s appetite for Taiwan may very well become a near-term flashpoint.
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Corporate reliance on China has resulted in a supply chain so brittle that an abrupt break in relations — whether from war, embargo or economic coercion — could cripple our defense, healthcare, technology and consumer economy overnight.
Bulldozers scoop soil containing various rare earth minerals to be loaded on to a ship at a port in Lianyungang, east China's Jiangsu province, Sept. 5, 2010. (STR/AFP via Getty Images)
Communist China already controls decisive shares of vital materials and components. It mines roughly 70% of global rare earth elements and processes more than 90% of them. The U.S. relies on China for many critical minerals essential to F-35 jets, submarines, missiles, semiconductors, electric vehicles and medical devices. Export controls imposed by Beijing in recent years are not abstract warnings; they are dress rehearsals for leverage.
The pharmaceutical sector is equally exposed. China supplies 60% to 70% or more of key active pharmaceutical ingredients and precursor materials for antibiotics and other essential drugs. Much of the rest flows through India, which itself depends heavily on Chinese precursors. In a crisis, American hospitals, pharmacies and military field hospitals would face immediate shortages.
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This would not be merely an economic inconvenience — it would be a national health emergency.
U.S. companies chased low prices and handed Beijing practical know-how, machinery, processes and market share. The result, as The New York Times has noted, is a rival that now dominates production across rare-earth magnets, solar wafers, steel, pharmaceuticals and electric vehicles. Profit was never Beijing’s sole objective; strategic dominance was.
Recent history proves the point. China embargoed rare earth exports to Japan in 2010 over a territorial dispute, forcing concessions without firing a shot. It has restricted gallium, germanium and other materials in response to U.S. actions. Beijing is mapping foreign supply chains through licensing requirements precisely to identify pressure points for future coercion.
Current corporate disclosures on these risks are vague, inconsistent and inadequate. If companies know the dangers, they are hesitant to alarm investors or invite regulatory scrutiny. That reluctance does not satisfy fiduciary duties or legal requirements for disclosure of material information. Investors cannot accurately price portfolio risk when required SEC filings gloss over the possibility of sudden loss of access to 70% to 90% of critical inputs. Policymakers similarly fly blind when assessing sanctions, tariffs, or defense strategies.
The commission has existing authority to demand clearer, more specific disclosures about geographic concentration risks, single-source dependencies and scenario analyses for major supply disruptions. Companies should quantify potential revenue, cost and operational impacts from China-specific shocks. Vague boilerplate about "geopolitical tensions" is no longer acceptable.
Critics will claim such guidance burdens business or politicizes markets. The opposite is true. Markets function best with accurate information. Concealing existential supply chain vulnerabilities distorts capital allocation and leaves shareholders exposed.
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The pharmaceutical sector is equally exposed. China supplies 60% to 70% or more of key active pharmaceutical ingredients and precursor materials for antibiotics and other essential drugs.
Free enterprise does not require pretending that doing business with a totalitarian rival bent on supremacy carries no unique downside. National security and economic resilience are not optional externalities; they are material facts.
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As war is costly and risky, China has implemented a strategy of "fighting without fighting" — weaponizing trade dependencies intentionally developed over decades. Recent commentary from Treasury Secretary Scott Bessent underscores the linkage: Trade policy, industrial capacity and national security are inseparable. Allowing foreign dependencies to degrade any one domain risks defining America’s future on Beijing’s terms, which is China’s goal.
The SEC should act promptly. Investors deserve transparency. Companies owe their shareholders honest assessment of risks, not happy-talk optimism. America’s economy and security cannot afford willful blindness about the most consequential supply chain vulnerability of our time. The time to disclose or, preferably, end the reliance is now.
Steve Milloy is the executive director of the Free Enterprise Project at the National Center for Public Policy Research.
