WASHINGTON: US Defense officials are worried China is using the coronavirus pandemic to take advantage in the strategically important businesses as COVID-19 leaves struggling companies in need of capital.
Procurement experts have warned the Pentagon will not be able to vet or help protect smaller companies down the chain even though the Department of Defense works to improve supply security, CNN reports.
Experts say the job is getting harder as the coronavirus pandemic has broadened the definition of the national security interests that includes medical supplies, pointing to at least a Chinese-owned company that asked to bid on a Pentagon contract, the report said.
Ellen Lord, undersecretary of defense for acquisition and sustainment had earlier said that the US has to be extremely careful about the efforts that some of the adversaries have to undergo sort of economic warfare.
According to a defense official, they are paying close attention to indicators that China is trying to take advantage of the coronavirus pandemic of a situation where defense companies need capital more, the report said.
It should be noted that a 2006 law had banned US military use of Chinese-made military equipment.
However, the coronavirus pandemic has changed the definition of national security concerns to include protective gear, drugs, and the medical supplies.
Meanwhile, some Chinese-owned firms have dominated the market for protective gears and other drug components, which are already part of the Pentagon’s medical supply chain.
According to the report, the Pentagon awarded a contract for coronavirus pandemic medical supplies to one company that then turned to a Chinese-owned subcontractor.
The contract — said to be a part of an effort called Project Jumpstart — is meant to accelerate the public health response when COVID-19 vaccine becomes available.
It should be recalled that on May 12, Health and Human Services Department and the Pentagon issued a $138 million contract to ApiJect Systems America to coordinate in the production of syringes in anticipation of a vaccine.
ApiJect later reached out to several subcontractors, including a leading US-based company Ritedose Corporation that was in 2017 purchased by the Chinese entity Humanwell Group, the report said.
The Pentagon has offered tools to support US businesses defend themselves against adversarial investment. It has also offered a webinar for some 300 companies on regulations and tools to fend off unwanted investors and bidders.
It is also partnering with vetted venture capital firms and simultaneously conducting checks with government agencies to ensure transparency about where the funds originate and the person behind the investments.
Pentagon authorities are also reaching out to other countries to discuss the possible risks.
In fact, dealing with China’s economic pressure requires a work and multilateral cooperation with likeminded democracies, according to Martijn Rasser, senior fellow at the Center for a New American Security.
Rasser pointed to Europe as concern by noting reports that China has threatened Denmark and Germany with economic consequences if they did not allow Huawei into their markets.
To recall, China recently slapped 80.5% tariffs on Australian barley exports after it called for a probe into the coronavirus pandemic’s origin.
(With inputs from CNN)
Comment