How to Reshape U.S. Defense Production to Counter China

KUALA LUMPUR, 24 AUGUST 2026 —

U.S. Urged to Shift Defense Production to Counter China, Report Says

A new report by the Council on Foreign Relations (CFR) warns that the United States must urgently reform its defense production to counter China’s military modernization, citing long production timelines and supply chain bottlenecks exacerbated by depleted munitions stocks from conflicts in the Middle East.

The report, Out of Ammo: A Two-Year Sprint to Rebuild the American Arsenal and Deter China, co-authored by Michael C. Horowitz, a former Pentagon official and now director of Perry World House at the University of Pennsylvania, highlights that the U.S. military lacks sufficient weapons and platforms to deter or fight wars, particularly in the Pacific.

The study, based on discussions with military, policy, industry, and congressional experts, argues that the U.S. cannot rapidly rebuild its arsenal of expensive, hard-to-produce weapons—such as cruise missiles, air defenses, and advanced ships—within two years, even with increased investment. The depletion of critical munitions, including air defense interceptors and precision-guided munitions, following operations in Iran, has further strained U.S. defense readiness.

Instead, the report recommends prioritizing the development and deployment of precise mass systems—lower-cost, more expendable, and autonomous weapons, sensors, and platforms that can be manufactured using commercial methods. These systems, inspired by lessons from Ukraine’s conflict with Russia and Iran’s operations, can be produced quickly, deployed rapidly, and sustained at scale in wartime.

Key recommendations include accelerating spending of already appropriated funds, relaxing procurement rules, and leveraging industrial policies to expand production. The report emphasizes that adopting precise mass systems at scale over the next two years is the most viable way to deter or deny China’s military ambitions, particularly in scenarios involving Taiwan.

The report does not propose sweeping reforms to the entire defense industrial base but focuses on urgent, temporary measures to strengthen U.S. military capabilities. It also notes that delaying action until conflict arises would be too late.

Among the immediate recommendations for Congress and the White House are measures to put precise mass production on a wartime footing, though the report does not specify exact policy changes.

The CFR, an independent nonpartisan organization, published the report on August 24, 2026.