Deterrence in the Digital Age
Autonomous unmanned and uncrewed systems as a "Hedge Force" against China and the economic ties between US tech companies and China
Welcome back, security scholars.
This week, I am excited to share two incisive reports with you all. The topics include:
How a “Hedge Force” provides the strategic utility to defend against a Chinese invasion of Taiwan.
Of the US tech companies supporting Ukraine, what are their financial ties to China?
Quick Tanks is a weekly collection and summary of the latest long-form analytic content on the topics of US defense, force structure, innovation, and policy considerations. We strive to aggregate all of the key sources of analysis and present brief, neutral summaries to help keep you informed. Should you feel inclined to learn more about any study, please reference the full report via the links provided.
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Hedging Bets
Rethinking Force Design for a Post-Dominance Era
By Bryan Clark and Dan Patt
Hudson Institute’s Center for Defense Concepts + Technology
Link to PDF; Link to Report Page
Focus: The report focuses on developing and implementing hedge forces to maintain US military effectiveness, especially in scenarios like a potential invasion of Taiwan by China.Analysis: Utilizing a mix of historical analysis, case studies, and simulation modeling, the report examines past US defense strategies, the current geopolitical landscape, and potential future conflicts. It leverages data and insights from recent military engagements and evolving military technologies, especially in the context of the PRC's military advancements.Argument: The era of unquestioned US military dominance is ending, necessitating a shift in force design to include specialized hedge forces. These forces would enable the US to effectively deter adversaries in high-consequence, low-probability scenarios like a sudden invasion of Taiwan by China, without compromising the flexibility and capability of the general-purpose forces across a broader range of military engagements.Insights: Adopting a hedge force strategy promises not only to amplify the risk for China while diminishing that for the United States, but it also stands out as a more cost-effective approach. Importantly, uncrewed systems play a crucial role in the proposed hedge force structure, offering cost-effectiveness and operational flexibility.Recommendations: See below for the full list of recommendations.As US military dominance is increasingly challenged by near-peer adversaries, a nuanced approach to deterrence and readiness is necessary. Consequently, this report from Hudson Institute’s Center for Defense Concepts + Technology posits “Hedge Forces” as a critical component in the US defense strategy against emerging threats from China, particularly against the backdrop of a potential invasion of Taiwan.
By investing heavily in hypersonic weapons, anti-ship missiles, space technologies, and electromagnetic capabilities, China has specifically designed its military to counter US and allied freedom of action in a Taiwan scenario. Meanwhile, the US tailors its forces to be general-purpose. Thus, while they are prepared for a wide spectrum of threats, US forces are relatively unequipped to defend against a Chinese amphibious invasion of Taiwan, at least without suffering an unacceptable level of losses.
To address this capability gap, hedge forces act as specialized military units designed to operate in scenarios where conventional forces may not suffice. These forces are designed to address specific high-consequence, low-probability scenarios, such as a Chinese invasion of Taiwan.
For such a scenario, the authors conceive of the Taiwan Bulwark Activation Force (TBAF), comprised of various uncrewed and unmanned vehicles that can overwhelm and disrupt the PLA’s air, missile, and electromagnetic defenses.
“The TBAF is likely to be most effective operating in small teams that execute preprogrammed plays and rely on minimal in situ coordination using line-of-sight radios that will be difficult for the PLA to jam. To reduce the complexity of TBAF C3, each system would have one primary function—such as kinetic attack, decoy, or sensing—that would predetermine its role in teams. To enable these teaming approaches, TBAF systems will need to be preprogrammed with aimpoints, jamming frequencies and techniques, or recognition features for the variety of likely targets. And to ensure the TBAF extracts maximum value from each force element, every vehicle would incorporate a warhead and be programmed to attack a target after completing its primary function.”
“Digital integration will be the most difficult technical challenge associated with fielding the TBAF. Orchestration of many assets across domains, especially with complex support relationships, is an open technical problem. As a result, the TBAF adopts a simple C2 architecture that divides the theater into engagement zones and pre-assigns TBAF teams to zones with objectives to search for and engage specific types of targets. This allows for TBAF C2 tools to use a simple application programming interface (API) between operators and uncrewed systems and terse descriptors of objectives for each system. Operators can obtain more complex behaviors using the C2 tool by combining TBAF systems into self-organizing teams.”
To evaluate the utility of the TBAF, the authors employed an engagement model to simulate how US forces would fare against an amphibious invasion in Baseline (general-purpose forces), Baseline + Reinforcements (double general-purpose forces) and Baseline + Hedge Force cases.
As the results show below, the Baseline + Hedge Force performed significantly better than its counterparts in defeating the invasion force.
“More important, reinforcing with the TBAF instead of general-purpose forces reduces Blue losses. Because hedge force units engage Red preferentially by design and because of their proximity, most of the Blue units lost or damaged come from the TBAF. For example, the baseline force includes 56 units, and the TBAF contains 240 units. Although more than 95 percent of the Blue force suffers a mission kill on average, that translates into all the hedge force systems and only 43 general-purpose units. This is lower than the mean of 53 general-purpose units suffering at least a mission kill in the baseline simulation.”
In addition to its tactical benefits, the TBAF would be highly affordable, given the technical simplicity and specific role of each TBAF unit. The authors estimate general-purpose reinforcements would cost around $28.5 billion while the TBAF would cost approximately $6.5 billion.
To be sure, the development and deployment of hedge forces face several hurdles, including technological innovation, congressional support, and geopolitical considerations. The unique nature of these forces, devoid of traditional service structures and requiring innovative acquisition and development approaches, necessitates focused leadership and strategic foresight. Considering these challenges, the authors prescribe the following recommendations:
Assign OUSD(R&E) responsibility for obtaining and integrating TBAF systems
Stand up a named JTF to lead TBAF experimentation and employment
Fund the TBAF as part of existing congressionally directed deterrence initiatives
Assess hedge forces as an enduring element of US defense strategy
To fully understand the strategic utility of a hedge force and how it can be implemented, I highly recommend reading the full report.
Which Ties Will Bind?
Big Tech, Lessons from Ukraine, and Implications for Taiwan
By Sam Bresnick, Ngor Luong and Kathleen Curlee
Center for Security and Emerging Technology
Link to PDF; Link to Report Page
Focus: The report focuses on the US tech companies that are supporting Ukraine and explores their complex financial and economic ties to China.Analysis: The analysis utilizes data from fDi Markets, Crunchbase, and various reputable sources to estimate the economic and financial linkages of 18 companies to China. Key indicators include overall revenue from China, greenfield FDI projects, supply chains, data and cloud computing centers, and R&D centers. Argument: The report argues that while US tech companies played significant roles in supporting Ukraine, their involvement in a Taiwan contingency would be more complex due to deeper economic ties with China. Of the 18 companies analyzed, Tesla and Apple, followed by Amazon and Microsoft, have the most extensive linkages to China.Insights: Apple and Tesla are particularly dependent on China for manufacturing and sales revenue, making them highly vulnerable to Chinese economic coercion. Moreover, the manner in which China engages Taiwan will likely factor into companies’ decisions to support Taiwan.Recommendations: US defense planners and policymakers should temper expectations regarding uniform support from tech companies in a Taiwan crisis. US officials should engage in closer coordination with these companies to gain insights into their stances and inform strategic planning.While numerous US tech companies have supported Ukraine in their war effort against Russia, many question whether the same companies would similarly support Taiwan in a conflict against China. To address this question, this CSET report studies the intricate economic and financial linkages that US tech companies have with China, which could influence their responses to a Taiwan scenario. Highlighting the varied depth of these companies' involvements in China—from manufacturing and revenue generation to R&D activities—the report reveals a complex web of dependencies that could have significant implications for national security and international diplomacy.
Tesla
Tesla's strategic investments in China, epitomized by its Shanghai Gigafactory, underscore its deep manufacturing and market penetration in the country. With nearly $6.8 billion allocated across 18 projects, Tesla's commitment represents approximately 32% of its total FDI expenditure and about 20% of its global greenfield FDI projects. The Shanghai facility is pivotal, accounting for over 50% of Tesla's global production in 2022, highlighting Tesla's reliance on Chinese suppliers for critical components, including those with government ties. Moreover, Tesla's substantial revenue from China, nearly $18.2 billion in 2022, further underscores the importance of the Chinese market to Tesla's financial health and global strategy. An important nuance of Tesla’s ties to China is that its CEO, Elon Musk, is also the CEO of SpaceX, whose satellite communications services may be critical in a Taiwan scenario.
Apple
Apple's dependency on China is multifaceted, encompassing assembly, supplier networks, and revenue. Over 95% of Apple's core products are assembled in China, with around 80% of its suppliers operating within the country. This extensive network underscores Apple's reliance on Chinese manufacturing capabilities. Financially, China is a crucial market for Apple, contributing $74.2 billion or 19% of its total revenue in 2022, primarily fueled by iPhone sales and services. Apple's greenfield FDI in China, though not as extensive as Tesla's in manufacturing, still signifies a significant investment, particularly in R&D, enhancing the proximity between innovation and production
Amazon and Microsoft
Amazon and Microsoft, while not as deeply entwined with China as Tesla and Apple, maintain substantial ties through supply chains, R&D labs, and data centers. Amazon's presence is marked by a large network of suppliers, with 32% of its total located in China, alongside strategic R&D centers in Beijing and Shanghai focusing on advanced computing technologies. Microsoft's engagement, although drawing a modest share of its global revenue from China, is notable for its R&D activities, particularly through its Microsoft Research Asia center, contributing significantly to the company's AI research output. These activities reflect both companies' strategic interests in China's innovation ecosystem and the potential vulnerabilities associated with their operations in the country.
Other Companies
Companies like Cloudflare, Google, Cisco, and Oracle maintain less intensive but still significant connections to China, through revenue generation, investments, and the establishment of data and cloud computing centers. These linkages, while not as pronounced as those of Tesla or Apple, illustrate a spectrum of engagement levels among US tech companies in China, reflecting a diversity of strategies to navigate the complex Chinese market and regulatory environment.
The authors underline how these ties also expose a vulnerability for China. If US companies reduce operations or completely divest their infrastructure in China, thousands or, potentially, millions of employees could face job losses and Chinese suppliers could lose significant portions of their revenue streams. In addition, should these US companies wind down their local R&D operations, it could hinder China's ability to access these vital networks, potentially damaging its future innovation capacity.
I highly recommend delving into the full report to better understand each company’s ties to China.