China:Olympics Are Worsening Supply-Chain Problems

    It might seem strange to say, but the Winter Olympics are making the supply-chain crisis worse. At least, that’s what a report from Everstream Analytics, a supply-chain firm, argues.

    The report’s authors’ case revolves around basic materials. “China has leveraged its abundant mineral deposits and lax environmental laws to become a global mining powerhouse in the 21st century,” they write. Over 50 percent of the world’s steel and aluminum production happens in China, and the country has near-monopolies on magnesium and silicon.

    The industry surrounding the extraction and refinement of those natural resources accounts for about one-third of China’s carbon emissions. With the Olympics in town, China is under pressure to be on its best behavior and prove to the world that it’s reducing its carbon emissions.

    It isn’t really doing that, though. Since Xi Jinping announced that China would become carbon-neutral by 2060, only 10 of China’s 30 regions met their energy goals. “The lack of discernible progress resulted in provincial authorities enforcing harsher penalties on provinces that failed to meet their energy targets,” the report says.

    Those restrictions from the central party apparatus are targeted on regions that produce many basic materials. The report says, “Officials have signaled that the steelmaking regions of Tianjin and Tangshan, the magnesium mines in Shanxi, and the aluminum hubs of Shandong and Henan province will face strict production control measures during the first quarter of 2022.” Sometimes those measures go so far as outright banning of production for a period of time.

    China has no feasible way to meet its climate goals without simply turning things off. Green-energy technology can’t generate nearly enough power to meet the country’s needs, and those needs are growing every day. When the world isn’t paying attention, it just ignores its international commitments. But with the Olympics, everyone’s eyes are on China. Like a child frantically cleaning his room when he hears his parents coming down the hallway, the CCP ordered its industries to stop for a bit so air quality would improve to international standards.

    Despite Xi’s supposed commitment to environmentalism, expect the smog to return once the Olympics are over. But it’s impossible to just shut down production for over a month and expect no disruptions. Everstream warns its customers about “potential shortages and delivery delays from Chinese suppliers, with recommendations to consider suppliers in alternate geographies.”

    As previously mentioned, though, many of these issues involve natural endowments. China happens to have a lot of minerals, and there’s not a lot we can do about that. So American carmakers and electronics companies, in many cases, are just going to have to wait.

    Magnesium is important for making aluminum alloys. The market for aluminum is already having a rough go of it and will only get worse if Russia invades Ukraine. A two-sided assault on global aluminum production is not going to help prices or supply chains.

    If you didn’t already have enough reasons to think holding the Olympics in a genocidal, totalitarian dictatorship was a bad idea, there’s also the supply-chain concerns. The IOC’s decision to hold these games in China is one of the greatest blunders in Olympics history.

    Content created by Dominic Pino

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