“China’s aggressive industrial policies have already eliminated some capabilities with critical defense functions, including solar cells for military use, flat-panel aircraft displays, and the processing of rare earth elements,” the report says, adding “China’s actions seriously threaten other capabilities, including machine tools; the production and processing of advanced materials like biomaterials, ceramics, and composites; and the production of printed circuit boards and semiconductors.”

China controls the vast majority of the world’s rare earths materials that are used to produce high-tech defense equipment. The US did not mine any rare earths domestically in 2017, instead importing an estimated $150 million, according to the United States Geological Survey.

Analysts in Washington have long warned that Beijing could exploit the US military and defense manufacturers’ reliance on China, which from 2013 to 2016, accounted for 78% of all rare earth imports into the US.

“Diversifying away from complete dependency on sources of supply in politically unstable countries who may cut off US access” is one of the report’s central recommendations.

“A core threat to the American industrial base comes from China,” White House Trade Adviser Peter Navarro wrote in an opinion piece for The New York Times discussing the year-long study.

“The broader goal, as the report makes clear, is to ‘diversify away from complete dependency on sources of supply in politically unstable countries who may cut off US access,'” he added.

The Trump administration plans to address supply bottlenecks and potential failure points using the same strategy employed during the Cold War and World War II — pumping millions of dollars into US companies that produce items critical to the US military, like high-performance aluminum, steel, tungsten and carbon fibers.

The funds will “address critical bottlenecks, support fragile suppliers, and mitigate single points-of-failure,” according to the report.

Defense officials said that one such investment will include a $250 million increase for small and medium manufacturers in the submarine supply chain.

The commitments fall in line with President Trump’s campaign promise to invest more in domestic manufacturing jobs and rely less on trade with China.

The report comes amid a rapidly deteriorating relationship between the United States and China, fueled in part by the ongoing trade war between the world’s two biggest economies.

Beijing and Washington have also sparred recently over the status of Taiwan and China’s growing military presence in the South China Sea, where it has militarized and occupied artificial islands in violation of international law.