CHINA WATCHHow to Reshape U.S. Defense Production to Counter China

By Michael C. Horowitz

Published 29 August 2026

A new Council on Foreign Relations report finds that long production timelines and supply chain bottlenecks—worsened by munitions stocks depleted in the Iran conflict—mean the United States must enact policy reforms and scale precise mass capabilities to counter China in the next few years. One of the authors provides critical takeaways from the report on the alternatives the U.S. government should pursue.

Operation Epic Fury and the ongoing conflict with Iran have pushed a long-simmering problem onto the front page: the U.S. military does not have enough of the weapons and platforms it needs to deter and fight wars. The consequences are reverberating not just in the Middle East, but around the world. 

Before the topic hit the headlines, the China Strategy Initiative and the Defense and National Security Program at CFR convened a study group to review the future of the U.S. defense industrial base and the reforms needed to maximize U.S. military power over a two-year period and a ten-year period. Drawing on the conversation in the study group—which included experts with extensive military, policy, industry, acquisition, and congressional experience—CFR has released a new report that illustrates how the United States’ exclusive reliance on exquisite, expensive, hard-to-produce weapons and platforms is unsustainable.

This is especially true given ongoing military operations around the world and the magnitude of the challenge posed by China’s military modernization. Rebuilding an arsenal of expensive cruise missiles, exquisite air defenses, and hard-to-produce ships cannot occur within a two-year period regardless of the resources the government or private sector invests. Although government and industry are working with newfound urgency to boost replenishment rates for these munitions—which are central to the current U.S. warfighting strategy in the Pacific—their efforts will take many more years to bear fruit. The U.S.-Israeli war with Iran has also severely depleted stocks of critical munitions, including air defense interceptors and precision-guided munitions, that will need to be rebuilt.

Instead, the authors concluded that the United States should spend the years ahead, especially the next two, maximizing its investments in precise mass systems—lower-cost, more attritable, more autonomous weapons, sensors, and platforms—that can be built based on commercial manufacturing and draw on lessons learned from Ukraine’s fight against Russia and even Iran’s operations against the United States. 

Read some of the report’s main takeaways below and the full report on CFR.org.