Pompeo: Supply Chain Issues 'Child's Play' If China Dominates Trade Route

Former Secretary of State Mike Pompeo warned that if China can dominate the trade route in the South China Sea, then supply chain shipments could suffer more as a result.

Appearing Sunday on "The Cats Roundtable" radio show on WABC 770 AM, hosted by John Catsimatidis, Pompeo said: "Southeast Asia, countries like Vietnam and Singapore and South Korea, all need to understand that the threat from China's domination of the South China Sea will make our supply chain problems that we're suffering from today look like child's play if the Chinese are able to dominate … commercial shipments through the South China Sea."

"I think that's their intention," he added. "And we, the United States, need to be an essential player in leading the response to convince the Chinese government that the cost for doing that is just too enormous. We can do it. … It simply takes presidential leadership, good communication and real resolve."

According to a report from China Power, a closure of the most prominent trade route in the South China Sea, the Strait of Malacca, could "precipitate globally-reaching supply chain disruptions, especially among interregional trade routes and multinational production hubs that are geographically tied to the South China Sea."

As Pompeo pointed out, "the countries of Southeast Asia would be particularly vulnerable. A hypothetical long-term closure may have a similar effect as the 2011 Thailand floods, which inflicted up to $32 billion in damages to Thailand's manufacturing base.

''In particular, the damage done to Thailand's hard-drive manufacturing sector crippled the global hard-drive supply chain and dropped worldwide production by 30%, while global prices skyrocketed by 190%," he said.

"Energy or commodity disruptions could have even more far-ranging economic consequences for the global marketplace. This is especially true for China – the world's top crude oil importer," the report added. "In 2016, almost 80% of China's oil imports passed through the South China Sea via the Strait of Malacca. For an oil-hungry country like China, a long-term closure would present a worrisome economic and political scenario."

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