China debates cutting US access to drugs as hostilities spike

Some government advisers say China should cut drug exports to the US if Washington increases sanctions
Others contend it could be immoral and speed up relocation of US pharmaceutical firms out of China
The United States is heavily reliant on imported medicines from China. Illustration: Henry Wong

The United States is heavily reliant on imported medicines from China. Illustration: Henry WongIn recent weeks, as the United States has ramped up its attacks on Chinese tech firms and the threat of financial decoupling has grown, government advisers in Beijing have begun debating a so-called nuclear option: cutting US access to medicines.From pills for pain relief to HIV medications, the US is heavily reliant on imported medicines from China thanks to large-scale offshoring in the 1990s.

While weaponising drug exports and precursors does not have official backing, its discussion has provoked concern in both Washington and Beijing.The idea has been recently floated by the likes of Li Daokui, a prominent Chinese academic and government adviser, who told local media that limiting access to medicines could be legitimate retaliation for US export controls on American technology and software.

In a statement to the South China Morning Post, Li said he was making a point that the US and China are mutually dependent and it is impossible for the two countries to decouple. But he also suggested in 2019 that China could curb its exports of antibiotics to the US as a trade war retaliation tool.

Other experts have suggested the idea is not only immoral, but it could also backfire.

“This suggestion doesn’t make much sense. It will fail to help China retaliate against the US, it will also ratchet up efforts to further block China’s hi-tech companies,” said Shi Yinhong, an international relations professor at China’s Renmin University and an adviser to the State Council.

Medical supply chain security has emerged as a key theme in the upcoming American presidential election, with both US President Donald Trump and Democratic nominee Joe Biden vowing to address the issue after the coronavirus pandemic exposed vulnerabilities in the nation’s pharmaceutical and medical device supply.

While US pharmaceutical firms still maintain research facilities at home, mass manufacturing of cheap generic drugs has all but disappeared.

Li Daokui has said China could limit American access to medicines if it was starved further of semiconductorscould cut. Photo: Winson Wong
Li Daokui has said China could limit American access to medicines if it was starved further of semiconductorscould cut. Photo: Winson Wong

Many of the key ingredients for antibiotics are no longer produced in the country, with the last American-based producer of penicillin ingredients shutting in 2004.

Last year, about 40 per cent of the antibiotics imported to the US came from China, including 90 per cent of chloramphenicol, 93 per cent of tetracyclines and 52 per cent of penicillin, according to data from the US International Trade Commission.

Reliance on China for the supply of some basic medicines is a vulnerability for the US and an advantage to Beijing, according to Zhang Weiwei, a professor of international relations at Fudan University, who is known for his nationalist views.

He said in a speech earlier this year that “all hospitals in the US would have to close without China’s supplies”, given its overdependence on Chinese antibiotics.

China is the world’s largest producer of active pharmaceutical ingredients (APIs), the precursor components used in generic drugs. More than 11,000 manufacturers pump out the pharmaceuticals, with India, the US and Japan the top three export destinations.

The US Food and Drug Administration (FDA) does not have specific information about the volume of APIs produced in China. But in a letter to the US Food and Drug Administration in August last year, Senate finance committee chairman Chuck Grassley estimated about 80 per of those used in the US were produced in China and India.

India’s generic drug industry, which the FDA says supplies 40 per cent of US generic drugs, is also heavily reliant on China. It imports up to 75 per cent of its APIs from its giant neighbour, but only because they are cheaper, according to a report from Indian publication eHealth Online.

Producing the precursors in China, the world’s largest electricity producer, is more cost effective, the report said.

China’s dominance in medicine production extends to antibiotics too, especially penicillin, tetracycline, and chloramphenicol; and it is the world’s largest producer and exporter of vitamins.

Last year, China exported US$9.8 billion in medical supplies and US$7.4 billion in organic chemicals – a figure that includes active pharmaceutical ingredients and antibiotics – to the US, according to data from China Customs.If it were to adopt the nuclear option of withholding medicine supplies, it would be nearly impossible for the US to reshore manufacturing or find alternative supplies in the short term, said Shi.

But he added Chinese companies would suffer, too, as many rely heavily on exports to the US, and these companies “will die” if they lose American clients.

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