China Coronavirus: Extreme Global Supply Chain Problems Inevitable Due to So Much Manufacturing Centralization in China
February 14th, 2020Via: The American Prospect:
A substantial amount of what the world produces originates in or is reliant on China. The nation’s presence as a major market, a manufacturing hub, and a source of materials and components can make any shock of this magnitude catastrophic. For decades, world leaders have allowed multinationals to chase lower labor costs, thereby centralizing production and fixing supply lines. We’re now seeing the tragic fragility associated with that decision.
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Perhaps the biggest concern is over medical supplies. China produces and exports a large amount of pharmaceuticals to the U.S., including 97 percent of all antibiotics and 80 percent of the active ingredients used to make drugs here. Penicillin, ibuprofen, and aspirin largely come from China. Last month, the medical supply firm Cardinal Health recalled 2.9 million surgical gowns “cross contaminated” at a plant in China; the blood pressure drug valsartan also saw shortages recently, thanks to tainted active ingredients at one Chinese plant. The combination of supply chain disruptions and increased demand at hospitals if coronavirus spreads to the U.S. could prove devastating.
In a dark irony, most of the world’s face masks—now ubiquitous in China as a precaution—are made in China and Taiwan, and even for those made elsewhere, some component parts are Chinese-sourced. Shortages have led China to declare the masks a “strategic resource,” reserving them for medical workers. U.S. hospitals are “critically low” on respiratory masks, according to medical-supply middlemen. Lack of protective gear could increase vulnerability to the virus, and the one place on earth suffering from production shutdowns is the one place where most of the protective gear originates.
