Globalization,
Coronavirus and Our Precarious Medical Supply Chains
By F. William Engdahl
February 28, 2020 "Information
Clearing House" -
The grave
risks and dangers in the process of worldwide
out-sourcing and so-called globalization of the past
30 years or so are becoming starkly clear as the
ongoing health emergency across China threatens
vital world supply chains from China to the rest of
the world. While much attention is focused on the
risks to smartphone components or auto manufacture
via supplies of key parts from China or to the
breakdown of oil deliveries in the last weeks, there
is a danger that will soon become alarmingly clear
in terms of global health care system.
If
the forced shutdown of China manufacture continues
for many weeks longer, the world, could begin to
experience shortages or lack of vital medicines and
medical supplies. The reason is that over the past
two decades much of the production of medicines and
medical supplies such as surgical masks have been
outsourced to China or simply made in China by
Chinese companies at far cheaper prices, forcing
Western companies out of business.
Sole source China
According to research and US Congressional hearings,
something like 80% of present medicines consumed in
the United States are produced in China. This
includes Chinese companies and foreign drug
companies that have outsourced their drug
manufacture in joint ventures with Chinese partners.
According to Rosemary Gibson of the Hastings Center
bioethics research institute, who authored a book in
2018 on the theme, the dependency is more than
alarming.
Gibson
cites medical newsletters giving the estimate that
today some 80% of all pharmaceutical active
ingredients in the USA are made in China. “It’s not
just the ingredients. It’s also the chemical
precursors, the chemical building blocks used to
make the active ingredients. We are dependent on
China for the chemical building blocks to make a
whole category of antibiotics… known as
cephalosporins. They are used in the United States
thousands of times every day for people with very
serious infections.”
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The made in
China drugs today include most
antibiotics, birth control pills, blood
pressure medicines such as valsartan,
blood thinners such as heparin, and
various cancer drugs. It includes such
common medicines as penicillin, ascorbic
acid (Vitamin C), and aspirin. The list
also includes medications to treat HIV,
Alzheimer’s disease, bipolar disorder,
schizophrenia, cancer, depression,
epilepsy, among others. A recent
Department of Commerce study found that
97 percent of
all antibiotics in the United States
came from China.
Few of these drugs are labeled “made in China” as
drug companies in the USA are not required to reveal
their sourcing. Rosemary Gibson states that the
dependency on China for medicines and other health
products is so great that, “…if China shut the door
tomorrow, within a couple of months, hospitals in
the United States would cease to function.” That may
not be so far off.
At
the time the outsourcing of US and European drug
manufacture to China began no one could imagine the
present health catastrophe growing out of Wuhan in a
matter of days. The massive China quarantine since
late January has shut some 75-80% of all Chinese
factories and created an unprecedented domestic
China demand for every kind of medical product since
the WHO declaration of medical emergency around the
coronavirus or COVID-19 events at the end of
January. It is unclear how badly deliveries of vital
pharmaceuticals including essential antibiotics from
China to the USA or Europe or other countries will
be affected though anecdotal reports of hospitals
beginning to experience delivery problems are
surfacing. Even the idea to turn to India, another
major global pharmaceutical supplier, only finds
that most Indian manufacturers are dependent on
China for their active drug ingredients.
Clinton and Outsourcing
The emergence of China in recent years as the global
giant in terms of pharmaceutical drugs and products
is embedded in the Made in China-2025 national plan
as one of the ten priority areas for China to gain
world leadership. It has not been simply a random
chance development. This in turn, as the present
COVID-19 crisis makes starkly clear, is a huge
vulnerability for the rest of the world.
How did such a one-sided situation develop? We have
to go back to the role of the Clinton Presidency in
what was then dubbed globalization, the Davos model
of outsourcing any and everything from advanced
industrial countries like the USA or Germany to
especially China after 2000.
In May
2000 in one of the most far-reaching actions of his
Presidency, Bill Clinton, with the strong backing of
US multinational companies, succeeded, over the
strong objections and warnings of many trade unions,
to get Congressional passage of a permanent
“most-favored nation” trade status for China and US
support for China entry into the World Trade
Organization. That gave the green light to corporate
America for a flood of overseas investment in
cheaper China manufacture known as “out-sourcing.”
Major US drug makers were among them. Within two
years of the passage of the US free trade agreement
with China the US shut its last penicillin
fermentation plant in New York State as a result of
severe Chinese
low-price competition.
In 2008,
the Chinese government designated pharmaceutical
production as a “high-value-added industry” and
bolstered the industry through subsidies and export
tax rebates to encourage pharmaceutical companies to
export their products. By 2019 China had become by
far the world’s largest source for
active pharmaceutical ingredients (APIs).
The Achilles Heel of this globalization and sole
dependency for vital medicines on one country now
becomes alarmingly clear as the future of China as a
reliable supplier of needed drugs and other medical
supplies has suddenly become a matter of grave
concern to the entire world.
F. William Engdahl
is strategic risk consultant and lecturer,
he holds a degree in politics from Princeton
University and is a best-selling author on oil and
geopolitics, exclusively for the online magazine “New
Eastern Outlook.” -
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