China’s Alleged Hypersonic Missile Test Is Bad News for Global Supply Chain

By Logan Wamsley

In what is being called by some analysts as a “Sputnik” moment for military technology, China shocked the world by allegedly testing a state-of-the-art, nuclear-capable hypersonic missile in August. According to recent reports, the missile completed a low-orbit the Earth before striking only two-dozen miles away from its intended target.

The apparent rapid advancement of this technology caught even the highest levels of U.S. intelligence off guard. According to one individual familiar with the event, the U.S. has “no idea how they did this.” While this is not the first known hypersonic missile test — China first tested one in 2014, and Russia in 2016 — this is the first that has displayed such a high level sophistication. The U.S. is still developing their hypersonic weapons capabilities, which will be able to be deployed from ships, land, and air. Unlike conventional missiles, a hypersonic missile can travel extreme distances and are capable of moving at a speed so great that current technology will struggle to shoot them down.

Theoretically, hypersonic technology also allows a military power to attack an enemy from any direction. The U.S., for example, keep the majority of its missile defense systems in Alaska with the expectation that should an attack occur, it would likely come from the West. Missiles that could come from the East, North, or South would effectively nullify this strategy.

For its part, China denies the test occurred and that the alleged missile was, in fact, a space shuttle. “This test was a routine spacecraft experiment to verify the reusable technology of spacecraft, which is of great significance for reducing the cost of spacecraft use. It can provide a convenient and cheap way for humans to use space peacefully. Many companies in the world have carried out similar experiments, said China’s Ministry of Foreign Affairs spokesperson Zhao Lijan.
Zhao continued, “China will work together with other countries in the world to benefit mankind in the peaceful use of space.”

Regardless, such developments in the wake of 2021’s supply chain challenges — some of which have direct origins with the U.S.’ current geopolitical tensions with China — are cause for concern for the international business community. Should these tensions escalate to the level of an “arms race” or a U.S.-China-centric “Cold War,” industries ranging from consumer electronics, to energy, to telecommunications, to healthcare will experience significant economic hardship. Since opening as a major manufacturing hub in the late 1990s, it has becoming a cornerstone of the international supply chain. According to the International Monetary Fund, China’s share of labor-intensive exports were an estimated 26.9% in 2018. That share is larger than the next five biggest labor-intensive goods exporters combined.

China also claims a substantial market share of raw materials for other international manufacturers. According to recent estimates, China is responsible for over 70% of the global supply of raw materials. In March of this year alone, China industrial firm profits increased 92.3%. Between January and March, profits rose over 137%. The electronic component and semiconductor market, however, is dominated by Taiwan, a chief rival of China, with the Taiwan Semiconductor Manufacturing Co. (TSMC) responsible for approximately 92% of the world’s most sophisticated chips. Should long-gestated tensions between China and Taiwan continue to escalate, the implications for the global business community could be disastrous.

In preparation for such worst-case scenarios, business supply chains must be taking time to seriously evaluate and re-structure themselves with proven solutions designed to mitigate risk. To see how a Partstat Inventory Ownership Solution can benefit you, contact a Partstat customer representative today.