“The company is not under the control of any government,” New Jersey-based contract manufacturing and development service provider (CDMO) GenScript Biotechnology Co said in a notice on June 2 in response to some US lawmakers’ request, along with the FBI, of a briefing on the company’s connections to China.
The response came after the US House Committee on Oversight and Accountability voted overwhelmingly (40-1) to approve the Biosecure Act (H.R. 8333), on May 15, making GenScript Biotech the latest victim of the US’ intensified measures to contain China’s biomedicine industry.
Following the same tactic that was used to target Chinese telecommunications companies in the late 2010s, the act would limit the ability of US life sciences companies to contract biotechnology companies that “have ties to the Chinese government or other designated foreign governments” on national security grounds once passed into law.
Specifically, five Chinese companies are named in the approved version of the bill, naming China’s contract research organization (CRO) giant WuXi AppTec, its sister company WuXi Biologics, BGI Group (BGI), BGI’s affiliate MGI Tech (MGI), and MGI subsidiary Complete Genomics.
In the next step, the bill must get through the full House and Senate for further debate. As an earlier version (S.3558) of the bill had been approved by the Senate in March, the Congress has to combine both versions into one before US President Joe Biden signs it into law.
From the communication technology, chips, and artificial intelligence, to biomedicine, from Donald Trump to Joe Biden, the US is accelerating efforts to utilize national power to maintain technological hegemony, observers said.
But the US would not succeed as it had dreamed, experts warned. The US is lifting the stone to drop it on its own feet as decoupling Chinese companies would first harm patients and companies in the US. And in a long run, the US’ companies’ enthusiasm for innovation and international cooperation would be largely discouraged, they noted.
Fast track to ‘de-Chinaization’
Although the legislative process has kicked off, some legal experts stressed the long and complex procedures before the bill can finally be part of a legal document. They noted that, usually, it would take years for an initiative to be passed into law in the US. Not to mention that there are still many details that need to be discussed. More revisions might also probably be made, some experts said, referring to the 8-year buffer period added in the latest version.
However, Liu Lu, a senior consultant from Ernst & Young Advisory (China), pointed out that the process had already moved faster than observers expected. “And we deem that Biden might also approve it very quickly once the bill is put on his table,” Liu told the Global Times.
“The deadline extension is a result of the consideration of the actual situation, but it does not indicate any change of the US’ long-term aim, which is that, as they had realized their dependence on Chinese CXOs, they want to reduce such dependence and maintain its leading position in the biomedical area and safeguard their supply chain security,” Liu said.
CXO is a collective name for companies that provide medical contract outsourced services.
Before the bill was amended, a survey carried out by the Biotechnology Innovation Organization (BIO), a Washington-based trade association representing biotechnology companies, revealed that 79 percent of 124 respondents have at least one contract or product agreement with a manufacturer based in China or owned by China, according to Reuters.
The trade group told Reuters that millions of US patients would be harmed unless there is “a comprehensive and thoughtful decoupling from China-based or China-owned biomanufacturing.”
According to media reports, in 2023, WuXi AppTec’s revenue from US clients was 26.13 billion yuan, accounting for 65 percent of the company’s total revenue; meanwhile, revenue from North America for WuXi Biologics was 8.073 billion yuan, accounting for 47.40 percent of the total revenue.
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Basically it looks like decoupling is continuing apace.
The US is in a spiral here and I don’t see any way it stops and there’s a feedback effect on China whether they like it or not. This will not help China, it will slow China’s progress somewhat. It will hurt the western proletariat.
Basically the more they do this, the more China has to take actions to secure their own ability to do things by investing in domestic manufacturing. The more they do that, the more the hawks in the US point to it as a threat that China is going to do that to industry x soon as well (despite the fact China only does this in response to these kinds of moves) and uses it to justify more decoupling in yet another industry. China has to keep pace with this and eventually will probably start guessing industries the US is going to do this to next (as you can’t spin things up in a day you have to) which adds further ammo to the deranged borger-imperialists idea that they have to have “clean” (free from China) supply chains.
In practice of course they can’t entirely eliminate China from the supply chains but they know that, it’s just banter from the more ignorant politicians but the point all along is to secure the heights of technology. So sure China can produce precursors to advanced medical drugs and such which are laundered through Vietnam and drive up prices in the west BUT China cannot be allowed to directly export the drugs, to enter into partnerships with US or European companies in any way that gives them and not the west the advantage, they can’t be allowed to get graduates from top university programs in the US and so on.
And they’ve done this with high technology, with AI, with green energy, with social media, and now this.
In other words, doubters be banished, this is full cold war 2.0, the sanctions, the blockade. There will be trade of course, more than between the US and USSR but the US will seek to taper even that and shift resources to India, etc this and next decade. Unfortunately the US likely has enough plundered loot and momentum to see at least some of this plan through and cause horrible problems for the global south and annoyances and growing pains, stunting to China for at least the foreseeable future, into next decade I’d say.
What’s interesting is this is being done at the west’s pace. It is not China calling the shots. The west is being cautious, acting slowly, methodically, prying away one industry at a time rather than passing blanket bans and making it known to increasing amounts of businesses in various sectors that it’s not safe to invest or do business in China because you could be cut off any time by these kinds of things. This is designed to have a chilling effect on anyone involved in anything more advanced than making clothing or McDonalds meals toys there.
China doesn’t want to provoke the west for several reasons. One being I think they want this process to happen as slow as possible so they can take maximum advantage of what trade they have until the last moment. The other being delaying war which they don’t want but the US is dead set on. Sadly by doing this they hand US the power to act freely and without any caution or consideration to Chinese retaliation. There are definitely arguments to be made for China trying to gut-punch the US economy in retaliation for these sanctions. Which yes would spur more and more quickly but would cause a lot of short-term pain and who knows could even get enough bourgeoisie off the side-lines to slow down or stop it though it seems unlikely. If China were to do such a thing, I’d advocate doing it very soon, soon enough that the US economy tanks before the election so Biden loses and Trump may maybe feel a little bit that China helped him which won’t go that far in relations but at least flexes power. Then again it could lead to a war. So many variables. The Chinese route is one of caution, but the US knows this and plans around it.