Shadow of the Armored Dragon: Securing U.S. Defense Supply Chains

Since the Second World War, there has not been a set of national security threats for the United States more serious or pressing than those the country faces today. [1] Central to these threats are the vulnerabilities that lie within American supply chains. These are the critical arteries for defense, technology, and economic resilience, yet many are highly susceptible to exploitation by adversarial actors like the Chinese Communist Party (CCP). The CCP has strategically embedded itself within global supply chains to advance its ambitions and challenge U.S. national security objectives. This entails a “dual circulation” strategy to bolster the self-reliance of the People’s Republic of China (PRC) in critical industries while simultaneously increasing the dependency of the United States and other nations on China’s resources. [2] By weaponizing economic dependencies and leveraging its Military-Civil Fusion (MCF) policy, Chinese state-owned enterprises (SOEs) possess operational footholds and leverage points within U.S. critical mineral and component supply chains. These supply chains feed directly into the U.S. defense industrial base, thereby granting the CCP a strategic vantage point. Employing the leverage of these SOEs, the People’s Liberation Army (PLA) seeks to exploit global supply chain dependencies by using them as levers to strengthen their force posture and coerce nations into geopolitical subservience. [3] In response, the Department of Defense (DoD), Department of Homeland Security (DHS), and various congressional committees have exposed CCP infiltration in supply chains critical to the warfighter, demanding an urgent overhaul of U.S. supply chain security.

The integrity of the United States’ national security, economic security, and defense readiness is contingent upon limiting malign interference in critical supply chains. The lack of full supply chain visibility, combined with insufficient accountability in both the public and private sectors, has left the United States vulnerable to foreign exploitation and supply chain disruptions that could enable economic or even military coercion. This effort requires an updated “National Supply Chain Security Strategy” that prioritizes full-scale supply chain mapping and visibility, interagency cooperation and oversight, and public-private cooperation that still protects commercial interests and promotes transparency. The government must move beyond ad hoc executive action as a crutch for a proactive policy framework to build resilient and secure defense supply chain ecosystems capable of countering current geopolitical threats.

Identified Supply Chain Vulnerabilities and Threat Assessment

U.S. military supply chains form a complex web of large-scale defense contractors linked with small-scale suppliers that support the procurement, production, and distribution of resources necessary to sustain the warfighter. The main goal is “getting the right things where they need to be at the right time and in serviceable conditions.” [4] The priorities of military supply chains and those of industry are inextricably linked to ensure components meet the proper standards required to enhance the United States’ defense posture. Yet in its effort to create a highly efficient supply chain and defense industrial base, the United States became dependent on foreign sources for 24 of the 50 classified critical minerals. [5] Alongside this, a host of supply chains critical for national defense are riddled with components manufactured by Chinese SOEs.

One such area where China dominates critical nodes within the supply chain is Light Detection and Ranging (LiDAR), a crucial technology that uses remote sensing to three-dimensionally map environments. For the U.S. military, LiDAR is heavily integrated across a variety of functions, including enemy detection, terrain mapping, surveillance, and autonomous vehicle navigation. Given LiDAR’s centrality, a serious concern among policymakers is the vulnerability of this technology to espionage, data manipulation, or intelligence-gathering by the PLA. [6] Chinese dominance in this sector is especially dangerous given that the PRC’s National Intelligence Law, Data Security Law, and Counter-Espionage Law command firms to cooperate with state intelligence operations, allowing the CCP to conduct espionage or sabotage the functionality of the technology — especially in systems made for international sale. [7] These laws make Chinese-produced LiDAR technology in U.S. defense systems a critical national security risk. By embedding these components into U.S. military supply chains, the CCP has clear access to DoD surveillance data, which could be weaponized in a future hot conflict between the United States and China.

There exist other serious vulnerabilities in different sectors. The Department of Homeland Security and the Select Committee on the Chinese Communist Party released a report in 2024 titled “Handling Our Cargo: How the People’s Republic of China Invests Strategically in the Maritime Industry,” which details the maritime security vulnerabilities posed by the presence of Shanghai Zhenhua Heavy Industries (ZPMC) in 80 percent of American crane manufacturing. [8] The contracts between U.S. port authorities and ZPMC lack sufficient legal safeguards against both accessing of data or equipment and unauthorized modifications, leaving open avenues for espionage. ZPMC has also installed unlicensed cellular modems in cranes to gain remote access to these devices, which are subject to the aforementioned Chinese national security laws. To prevent circumnavigation of ZPMC’s crane building dominance, Chinese SOEs maintain majority shares in all alternative companies or ensure these companies operate close to the Chinese market. This dependence includes reliance on Chinese capital, regulatory approvals, supply chain access, and political support. ZPMC’s grip over global port security infrastructure demonstrates how supply chain vulnerabilities extend into critical infrastructure. Control over ship-to-shore cranes affords the CCP the capability of surveilling and disrupting the movement of goods essential to national defense. This is especially dangerous to DoD-designated ‘strategic ports’ that are essential for U.S. military readiness and maritime security.

In 2022, the Pentagon discovered that the raw materials used to construct critical components of F-35 fighter jets were mined in China. Although the U.S. company Honeywell manufactures an F-35 engine component called the turbomachine, the cobalt and samarium used in its production were sourced from China. While the origin of these metals presented no threat to the F-35’s functionality, the DoD was nevertheless concerned about how the Chinese-sourced materials entered the turbomachine supply chain. The DoD responded by suspending F-35 deliveries to investigate the supply chain and compliance with procurement standards, as well as how PRC-sourced materials entered the defense supply chain and violated the “Buy America” Statute. Ultimately, the DoD resumed deliveries of the F-35 after concluding the issue did not compromise national security. [9]

The vulnerabilities in the F-35 supply chain demonstrates how little the DoD knows about the origins of components in critical defense assets. Completed systems are procured from companies like Lockheed Martin, which sources from subcontractors like Honeywell, who further rely on small-scale suppliers. This multi-layered structure creates an opaque web of businesses that dilutes accountability and hinders oversight.

The F-35 case study underscores the risks of this opacity. It serves both as a warning and concrete indicator of how a conflict with the CCP could abruptly sever access to critical inputs, such as cobalt and samarium, thereby subverting military readiness. The discovery of Chinese-sourced materials in the F-35’s turbomachine is not an isolated incident but rather a symptom of a broader failure in U.S. supply chain governance. This lack of visibility across multiple tiers of subcontractors highlights systemic weaknesses that adversaries have exploited.

The risks of these blindspots in the supply chain are not theoretical. The opaque status quo opens the door for sabotage. On September 17, 2024, Israeli intelligence successfully exploited a supply chain vulnerability in a pager used by Hezbollah operatives in Lebanon, rigging the device to detonate and kill key targets in the terrorist organization. [10] This attack struck a heavy blow to Hezbollah’s leadership and demonstrated how years of a known supply chain vulnerability can be strategically exploited by an adversary.

The production process for the pager involved a complex supply chain of multiple subcontractors for minerals, components, and processing. At one point, Israeli forces infiltrated and exploited a vulnerability to rig a component of the device to unexpectedly explode. [11] While a successful mission, this should serve as a warning for the United States: without complete visibility and control over its own defense supply chains, the United States risks similar exploitation if the CCP seizes the right opportunity during a moment of conflict. This presents both serious operational and tactical risks. If hostile actors infiltrate a supply chain for critical military technologies, they could sabotage entire defense systems and pre-position vulnerabilities that could be triggered in a moment of crisis. Strengthening supply chain oversight is not just a matter of economic resilience — it is a critical matter of national security. From raw materials to technological components, the CCP has deeply embedded itself within the U.S. defense apparatus. Exacerbating the issue, the DoD has little to no knowledge of the components that go into its critical systems. This is a major problem for U.S. national security. The United States cannot have a secure and reliable defense industrial base without complete oversight of the supply chains feeding into its military and critical infrastructure.

Creating an Updated National Supply Chain Security Strategy

The CCP’s infiltration of U.S. supply chains necessitates an updated National Supply Chain Security Strategy that pre-emptively reduces vulnerabilities, protects critical industries, and sets competitive long-term goals to ensure the resiliency and security of the defense industrial base. The strategy must focus on visibility and how artificial intelligence can provide a clear picture into the origins of every component in the U.S. defense and critical infrastructure supply chains. The overall objective is to ensure that U.S. military systems and critical infrastructure remain reliable under times of war.

The United States has yet to formally or publicly revise its supply chain strategy since the original framework was introduced in 2012. The first Trump administration and Biden administration initiated reviews and various executive orders commensurate with the severity of the “China threat,” yet these efforts have prompted contentious views on American supply chains and have not produced a cohesive overarching strategy. The existing 2012 Obama administration-led National Strategy for Global Supply Chain Security, one of the first of its kind, provides a vague framework for ensuring resilience in global supply chains. The document outlines a framework to promote the “efficient and secure movement of goods.” [12] While it recognizes the importance of safeguarding critical supply chains, there are several gaps that have contributed to the current logistical nightmare in the Pentagon today.

The strategy employs a ‘one size fits all’ approach that misaligns U.S. strategic priorities with national defense objectives. Effective risk reduction requires a sector-specific framework that identifies vulnerabilities and closes gaps for malign interference. The strategy’s first goal to “Promote the Efficient and Secure Movement of Goods” inadvertently facilitated extensive offshoring in pursuit of lower costs. [13] Such offshoring limits supplier visibility by fostering complex, multitiered supplier networks in which numerous subcontractors supply critical components. Foreign adversaries have successfully exploited the blind spots in these networks through embedding themselves in critical industries to gain strategic advantage. In prioritizing efficiency above all, even in the realm of national security, the United States has undermined its own national interests for decades.

The primary objective of an updated National Supply Chain Security Strategy should be to coordinate stronger private sector and international engagement in supply chain security. While government agencies maintain overarching insight and enforcement capabilities, the private sector has access to the most granular, real-time, and accurate insights into supply chain mapping. Firms can facilitate supply chain innovation, technological modernization, and procurement efficiency optimization at a much more rapid pace than the government. Defense technology and infrastructure companies also have either deep visibility into their own supplier networks or the capacity to gain such insight and can therefore detect vulnerabilities quicker than government agencies already encumbered by bureaucratic processes. Information sharing as a result of public-private sector cooperation could threaten a firm’s competitiveness, especially in industries where supply chain information is critical to protecting commercial security and market advantage. A feasible strategy must therefore strike an acceptable balance between enabling effective joint risk assessments while also preserving a certain degree of privacy for private sector companies.

An updated strategy must also facilitate interagency coordination. All supplier networks critical to defense readiness and the defense industrial base in which malign actors hold at least some control should be identified and reported across all agencies in order to enhance transparency and awareness. There is a lack of organization across the DoD, Defense Intelligence Agency, Defense Logistics Agency, DHS, Office of the United States Trade Representative, Congress, the Department of Commerce, the Futures Command in each military branch, and other respective parties. There must be a formal aggregation of all agency stakeholders to compel effective strategic policy planning for existing and future supply chain mapping.

Supply chain policy momentum currently remains contingent on executive orders and presidential discretion due to distinctive paradigms on national security threats. Such reliance poses risks to the longevity and continuity of strategic planning, as well as fragmented priorities within a particular administration. There is a clear absence of a durable institutional framework, instead leaving supply chain security subject to the electoral cycle. Supply chain security policy has thus evolved into a reactive policy area that has a weak backbone to stand on.

The future of supply chain security should not reside solely at the discretion of the president to be governed principally through executive orders. Instead, to ensure sustained oversight and coordination of defense agencies, supply chain security must be embedded as a permanent structure of interagency coordination. A dedicated position on the National Security Council (NSC) should be established to oversee defense and critical infrastructure-related supply chain security. While the NSC advises the president, this position serves to coordinate across departments. This official would be responsible for strategic policy planning, aligning interagency coordination, strengthening the capability of departments to detect emerging risks, and developing strategies to safeguard critical supply chains from malign exploitation. By consolidating this function within the national security apparatus, the United States can ensure a unified response to potential supply chain breaches that can meet the immediate and long-term needs of evolving threats.

An immediate priority and goal of the updated strategy should be to secure critical infrastructure that has already been identified as risk prone. There should be strict scrutiny of all foreign components to decouple the defense apparatus from the PRC. This effort should include fostering public-private partnerships to accelerate domestic manufacturing and incentivize investment in critical supply chain sectors. These partnerships should encourage the structured participation of the private-sector in the “Supply Chain Resilience Initiative,” and a similar initiative that extends beyond critical minerals acquisition, to strengthen domestic production for defense and critical infrastructure supply chains, as well as facilitate friend-shoring for foreign projects intended to address the gaps in the efforts to onshore. Engaging the private sector is paramount to ensuring that supply chain security is not merely acknowledged but fully integrated as a priority and principle within the national industrial strategy. To certify contractors, the strategy should expand the functions of the Pentagon’s “Cybersecurity Maturity Model Certification” across critical industries. The certification obliges DoD cyber contractors to evaluate their entire cybersecurity ecosystem to ensure a resilient cyber supply chain. This standard should extend beyond the cyber supply chain into all defense and critical infrastructure supply chain ecosystems.

An updated National Supply Chain Strategy should furthermore adopt a proactive policy framework. Current transparency efforts are limited to compelling surface-level due diligence checks as risks are identified, the failures of which are reflected in the National Defense Authorization Act Section 1260H and its ineffectualness at banning all business with the listed companies or with Chinese entities in general. [14] The notion of ‘due diligence’ must therefore evolve. Suppliers that conduct business with the DoD for critical infrastructure should cease outsourcing to China. There should be a coordinated effort to craft enhanced risk assessment protocols conducted with artificial intelligence and machine learning to streamline remote sensing and diagnostic analysis for the traceability of raw materials. Nevertheless, Section 1260H has the potential to facilitate interagency awareness, as discussed previously, of sanctioned entities when agencies coordinate amongst themselves to create a secure national security apparatus.

The DHS’s blueprint for preventing the importation of goods from the Xinjiang region in China identifies due diligence as a visibility matter. [15] Just as the United States Customs and Border Protection Agency is conducting the mapping of major global supply chains that source from Xinjiang using advanced artificial intelligence, emphasizing the necessity of integrating pre-emptive risk assessments into the supply chain mapping exercise. The DoD must also conduct a similar mapping procedure not just of suspected at-risk supply chains, but for all supply chains. By adopting this proactive mapping model, rather than the current reactive procedures, the DoD can mitigate vulnerabilities before they become crises.

Safeguarding emerging technologies is key in prioritizing security, particularly as the PRC aggressively seeks dominance in emerging critical areas, such as artificial intelligence (AI), quantum computing, and autonomous vehicles. With the intent of becoming the world’s leader in AI by 2030, the CCP has invested heavily in this technology. [16] The PRC claims to have invested 467 billion yuan in its entire domestic R&D process in 2023 alone. [17] The United States not only needs a cohesive AI policy to widen its technological lead and promote private investment and innovation in this field, but also a broader strategic framework that provides best practices towards supply chain management across critical and emerging technologies. An updated National Supply Chain Security Strategy must act as the codified foundation for safeguarding emerging technology sectors, ensuring they are free from adversarial influence at every stage of development. The United States already lags behind China in quantum computing. The PRC’s “Five-Year Plan” for quantum computing has produced a substantial patented quantum technology portfolio. [18] If the United States fails to secure its competitive advantage in the aforementioned industries, the country risks conceding technological superiority to the PRC, which would worsen the United States’ ability to project power and thereby protect allies and deter adversaries.

The CCP’s infiltration of U.S. supply chains has exposed critical vulnerabilities within the defense and industrial apparatus, highlighting an urgent need for an updated National Supply Chain Security Strategy. Previous frameworks, consistently prioritizing efficiency over security, have led to offshoring, lack of oversight, and complex supplier networks that have contributed to contemporary vulnerabilities that have been detected across all layers of the defense apparatus. An updated strategy must shift toward a risk-prevention approach across every tier of the supply chain that harnesses artificial intelligence to enhance visibility. Furthermore, the establishment of a position in the NSC is necessary to institutionalize the responsibility for strategic oversight, interagency coordination, and further reduce inconsistencies associated with executive-order driven actions. This strategy must focus on preemptive risk-mapping, strict scrutiny of foreign components, the expansion of cybersecurity standards, and stronger public-private partnerships for defense and critical infrastructure supply chains. As the CCP attempts to aggressively dominate the share and supply chains of emerging technologies, the defense base, and critical infrastructure, the U.S. risks ceding control. Without these comprehensive changes, the U.S. faces escalating threats to its national security, strategic autonomy, and industrial base, and must confront the real prospect of being outmaneuvered in a conflict with the PRC.

Conclusion

The United States stands at a pivotal moment in the history of its national security, where securing critical supply chains is no longer just an economic necessity but a fundamental pillar of resilience and preparedness. The defense supply chain is designed with the intention of giving the United States a competitive advantage in the defense industrial base. Supply chain vulnerabilities in the production of critical infrastructure such as cranes, weapons systems like F-35 fighters, and technologies like LiDAR are some of the most severe. Among an array of other, undetected vulnerabilities, this exposure jeopardizes the United States’ capacity to maintain strategic autonomy in critical sectors. A concerted effort must be made at creating an organized and unified strategy to fix these vulnerabilities and ensure defense readiness in a time of uncertainty and potential conflict. Supply chain transparency and security is vital for economic security and national security.

There is therefore an urgent need for joint, comprehensive policy action to address vulnerabilities with U.S. supply chains in critical industries. This begins with an updated National Supply Chain Security Strategy that ensures the long-term competitiveness of emerging technologies and industries while also addressing the current and present vulnerabilities in the supply chain that are a threat to long term resiliency. A position must be established in the NSC that addresses strategic policy planning across all defense-related supply chain security matters. Furthermore, existing cyber supply chain security certifications must be expanded to include non-cybersecurity supply chains for contractor mapping. The United States cannot afford to sacrifice the integrity of its warfighting capabilities for the sake of low-cost acquisition. Only through decisive policy action, alignment of priorities, interagency cooperation, and responsible investment can the United States secure its supply chains and outmaneuver the dragon to ensure the sovereignty of the national defense infrastructure.

Natalia Lopez ’26 serves as the President of the AHS chapter at the University of Florida, where she is majoring in Economics and Political Science.

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Notes:

[1] Commission on the National Defense Strategy. Executive Summary: Report of the Commission on the National Defense Strategy. RAND National Security Research Division, 2024

[2] U.S.-China Economic and Security Review Commission. Report to Congress. Washington, DC: U.S. Government Publishing Office, 2022

[3] National Intelligence Council, Annual Threat Assessment of the U.S. Intelligence Community, Office of the Director of National Intelligence, 2023

[4] Defense Logistics Agency, “Supply Chain Security Strategy,” https://www.dla.mil/Portals/104/Documents/Headquarters/StrategicPlan/SupplyChainSecurityStrategy.pdf

[5] Umud Shokri, Critical Minerals and the U.S.-China Trade War, Trends Research and Advisory, 2025, https://trendsresearch.org/insight/critical-minerals-and-the-u-s-china-trade-war/?srsltid=AfmBOorKmhSeQVfnN1NCuod8HyFbOEuoy_LQwhM8sshFZkeM8Gs8XayJ

[6] John Moolenaar, Raja Krishnamoorthi, et al., Letter to Commerce re LiDAR, Select Committee on the CCP, 2023, https://selectcommitteeontheccp.house.gov/media/press-releases/moolenaar-and-krishnamoorthi-applaud-proposed-actions-counter-ccps-maritime

[7] Craig Singleton and Mark Montgomery, Laser Focus: Countering China’s LiDAR Threat to U.S. Critical Infrastructure and Military Systems, Foundation for Defense of Democracies, 2024, https://www.fdd.org/analysis/2024/12/02/laser-focus-countering-chinas-lidar-threat-to-u-s-critical-infrastructure-and-military-systems/

[8] John Moolenaar, Raja Krishnamoorthi, and Mark Green, Handling Our Cargo: How the People’s Republic of China Invests Strategically in the U.S. Maritime Industry, Department of Homeland Security; Select Committee on the CCP, 2024

[9] Stephen Losey, “Pentagon Suspends F-35 Deliveries over Chinese Alloy in Magnet,” Defense News, September 7, 2022, https://www.defensenews.com/air/2022/09/07/pentagon-suspends-f-35-deliveries-over-chinese-alloy-in-magnet/

[10] Raffi Berg, “Ex-Israeli Agents Reveal How Pager Attacks Were Carried Out,” BBC News, December 23, 2024, https://www.bbc.com/news/articles/cwy3l02wxqdo

[11] Ari Hawkins and Joseph Gedeon, “Middle East Pager Attacks Ignite Fear of Supply Chain Warfare,” POLITICO, September 19, 2024, https://www.politico.com/news/2024/09/19/pager-attacks-supply-chain-warfare-00180136

[12] Barack Obama, National Strategy for Global Supply Chain Security, The White House, 2012, https://obamawhitehouse.archives.gov/sites/default/files/national_strategy_for_global_supply_chain_security.pdf

[13] Obama, National Strategy for Global Supply Chain Security

[14] “Entities Identified as Chinese Military Companies Operating in the United States in Accordance with Section 1260H of the National Defense Authorization Act for Fiscal Year 2021,” U.S. Department of Defense, 2021, https://media.defense.gov/2025/Jan/07/2003625471/-1/-1/1/ENTITIES-IDENTIFIED-AS-CHINESE-MILITARY-COMPANIES-OPERATING-IN-THE-UNITED-STATES.PDF

[15] Department of Homeland Security, Office of Strategy, Policy, and Plans, Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China, June 17, 2022, https://www.dhs.gov/sites/default/files/2022-06/22_0617_fletf_uflpa-strategy.pdf

[16] Ashwin Acharya and Zachary Arnold, Chinese Public AI R&D Spending: Provisional Findings, CSET Issue Brief, Center for Security and Emerging Technology, 2019, https://cset.georgetown.edu/publication/chinese-public-ai-rd-spending-provisional-findings/

[17] Ministry of Science and Technology of the People’s Republic of China, Communiqué on National Expenditures on Science and Technology in 2023, National Bureau of Statistics of China, October 2, 2024, https://www.stats.gov.cn/english/PressRelease/202410/t20241014_1956904.html

[18] Shania Tews, “Quantum: Computing’s Next Wave,” American Enterprise Institute, December 11, 2023, https://www.aei.org/technology-and-innovation/quantum-computings-next-wave/

Image: “Capt. Andrew “Dojo” Olson, F-35 Demonstration Team pilot and commander performs a high-speed pass during the Oregon International Airshow Sept. 21, 2019 in McMinnville, OR. The F-35 Demo Team co-headlined the show with the Royal Air Force Red Arrows,” by Air Force Senior Airman Alexander Cook, retrieved from https://commons.wikimedia.org/wiki/File:F35_Lightning_during_the_Oregon_International_Airshow.jpg. This work is in the public domain in the United States because it is a work prepared by an officer or employee of the United States Government as part of that person’s official duties under the terms of Title 17, Chapter 1, Section 105 of the US Code.