America’s Asia-Pacific defense decentralization policy is rooted in a systemic crisis gripping its military-industrial complex. The breaking point has come to light amid its ongoing conflict with Iran, combined with a protracted maritime campaign against Houthi militants in the Red Sea.
These conflicts have forced the US military to expend long-range precision munitions and air-defense interceptor missiles at a scale unseen since the Cold War, exposing the fragility of Washington’s high-intensity war readiness, particularly in East Asia vis-à-vis a fast-militarizing China.
The Middle East theater has served as a harsh wake-up call for the Pentagon regarding the unsustainable cost-exchange ratio inherent in modern wars of attrition. US Navy and Army units have routinely fired Standard Missile-6 (SM-6) interceptors, costing $5.3 million each, or Patriot PAC-3 missiles, costing $3.9 million each, to neutralize cheap Iranian-designed one-way attack drones like the Shahed-136. Iran’s drones cost as little as $20,000 to $50,000 to produce.
This tactical imbalance has drained US air-defense magazines and handed Iranian attackers a clear logistical advantage. When the cost of deterrence far outpaces the cost of aggression, the conventional defense model faces a long-term strategic failure.
The fallout has severely degraded Washington’s global combat readiness, drawing down as much as half of its total inventory of Patriot and Terminal High Altitude Area Defense (THAAD) missiles. The depletion has exposed a geostrategic vulnerability in the Western Pacific, leaving US ammunition stockpiles inadequate to backstop Taiwan’s defense contingencies against a potential Chinese invasion.
The inability to rapidly replenish stocks stems from the structural atrophy of America’s defense industrial base, which for decades has operated on a peacetime footing, prioritizing cost efficiency and just-in-time inventory practices.
As a result, surge production capacity was hollowed out — a crisis compounded by chronic bottlenecks among lower-tier component suppliers, a severe contraction in solid rocket motor (SRM) manufacturing and a critical shortage of specialized labor after decades of national deindustrialization.
To bypass these domestic constraints, the US Department of Defense launched the Partnership for Indo-Pacific Industrial Resilience (PIPIR). First introduced at the Shangri-La Dialogue in May 2024 and formally inaugurated in Honolulu that October, the multilateral framework has since expanded to 16 nations, most recently welcoming Thailand and the United Kingdom.
Unlike short-term crisis mechanisms in Europe, PIPIR is designed as a long-term, institutionalized defense-industrial architecture, distributing production, assembly and maintenance nodes as close as possible to potential flashpoints in an effort to defeat the Pacific’s “tyranny of distance” and blunt China’s Anti-Access/Area Denial (A2/AD) capabilities.
By embedding logistics bases directly on the frontlines, Washington hopes to sustain high-intensity combat operations without relying on trans-Pacific supply lines vulnerable to interdiction.
Asymmetric industrial reality
However, Washington’s PIPIR ambitions confront China’s vastly larger defense-industrial machinery, which operates on what amounts to a permanent wartime footing.
Through its state-mandated Military-Civil Fusion strategy, Beijing has integrated its civilian manufacturing sector with national defense requirements, opening a wide capacity gap vis-à-vis the US across critical domains. This integration would conceivably allow China to replace combat losses and replenish missile magazines within weeks – a logistical advantage the Western bloc no longer enjoys.
In shipbuilding, for example, China’s construction capacity is estimated at many times that of all US shipyards combined — one widely cited Pentagon estimate put the gap at roughly 200-to-1. A single Chinese shipyard, such as Jiangnan Shipyard in Shanghai, has a physical footprint larger than the entire US military and commercial shipbuilding industry.
That industrial dominance shows up directly in hull counts: The Pentagon assesses the PLA Navy (PLAN) as the world’s largest navy by number of ships, while the US Navy’s active battle fleet has shrunk to under 300 vessels. China is also mass-producing advanced warships, such as the Luyang III-class (Type 052D) destroyer, equipped with Active Electronically Scanned Array (AESA) radar and vertical launch systems that rival the US Aegis system.
Although the US retains a qualitative edge with its 11 nuclear-powered supercarriers, China is quickly closing the gap with its newest carrier, the Fujian, which features an electromagnetic aircraft launch system (EMALS).
A similar US-China imbalance exists missile technology and combat aviation. Within the First Island Chain, China holds a large asymmetric advantage, deploying more than 1,250 land-based intermediate-range ballistic and cruise missiles.
The US, by contrast, has no land-based missiles in this class — a legacy of its historical compliance with the now-defunct INF Treaty — forcing it to rely on air and naval platforms operating within China’s dense denial zone.
Meanwhile, the US military’s inventory of combat-coded frontline fighter jets has shrunk to about 800, short of the roughly 1,200 aircraft the Pentagon says are needed to manage two simultaneous regional conflicts.
Beijing, meanwhile, is producing fifth-generation J-20 stealth fighters faster than Western intelligence agencies had projected. While the US still leads in total military aircraft and helicopters, China is rapidly scaling its tactical helicopter fleet to prepare for large-scale amphibious and air-assault operations across the Taiwan Strait.
Operationalization of PIPIR
To counter this, PIPIR operates across four highly specialized workstreams: sustainment (maintenance, repair and overhaul), production, supply-chain resilience and policy and optimization.
Funding blends US military allocations — including the $9.9 billion Pacific Deterrence Initiative for fiscal 2025 and a $24.7 billion supplemental appropriation for munitions supply-chain recovery — with international development capital, including the US Development Finance Corporation’s $205 billion investment portfolio.
Yet even combined, the defense budgets of Washington’s three primary Pacific allies — Japan, South Korea and Australia — total roughly $160 billion, a fraction of what’s needed to build manufacturing infrastructure capable of matching China’s industrial output.
Tactically, PIPIR distributes responsibilities based on each ally’s industrial strengths. Australia is leveraging its aerospace sector to become a regional MRO hub for the P-8 Poseidon’s radar systems and to co-produce Guided Multiple Launch Rocket Systems (GMLRS).
Japan is leading efforts to manufacture solid rocket motors, PAC-3 MSE interceptors and AIM-120 AMRAAMs, while opening its commercial shipyards to service frontline US Navy warships.
South Korea has positioned itself as a regional MRO base, maintaining turboshaft engines for CH-47 Chinook helicopters and executing overhaul contracts for US military logistics vessels at Hanwha Ocean and HD Hyundai Heavy Industries.
The Philippines is slated to anchor frontline manufacturing of 30mm tactical cannon ammunition. Backstopping these efforts are the trilateral Luzon Economic Corridor (LEC) and the Pax Silica Hub in New Clark City, which integrate commercial infrastructure, secure semiconductor supply chains, small modular reactor (SMR) nuclear energy assistance, and access to critical minerals such as nickel and cobalt for the US defense supply chain.
China’s strategic pushback against the PIPIR has been forceful. Beijing has condemned PIPIR as an illegal “securitization of economic issues”, arguing that it disrupts global markets. In response, China has reinforced its own defense-industrial network by deepening the “Axis of Upheaval” with Russia, Iran and North Korea.
Avoiding direct, overt lethal aid to skirt Western sanctions, Beijing instead functions as a major supplier of dual-use technologies and raw materials — providing precursor chemicals for missile propellants to Iran and microelectronics for Shahed drones, which are then mass-produced at Russia’s automated Alabuga factory.
In the Indian Ocean, China has countered India’s alignment with the US by deepening its military-industrial ties with Pakistan. This defense partnership includes the delivery of eight Hangor-class AIP-equipped diesel-electric submarines, collaboration on the fifth-generation J-35 stealth fighter, and acquisition of the HQ-19 missile shield, designed to intercept hypersonic threats.
Pacific hegemony projection
The rollout of PIPIR has altered the regional landscape, creating a security dilemma for the very allies Washington seeks to enlist.
First, the introduction of missile-assembly plants and SRM manufacturing lines makes these allied territories potential targets for preemptive strikes by the PLA Rocket Force should a conflict erupt over Taiwan.
The prospect of their homelands becoming proxy battlefields risks fueling anti-militarization protests in Japan, South Korea and the Philippines, where many view their countries as shifting from political allies to front-line shock absorbers in any great-power conflict.
Second, PIPIR complicates and destabilizes the diplomatic and economic ties these allies share with China, which remains their largest trading partner. Heavy reliance on Chinese export markets and Beijing’s dominance in rare earth elements leave these nations exposed to economic coercion — a tactic China has already used through export restrictions targeting Japan.
Rather than achieving comprehensive security, closer alignment with and active participation in the US military-industrial network risks triggering retaliatory sanctions from Beijing capable of damaging hundreds of billions of dollars in domestic civilian manufacturing.
Third, friction between the US and its partners threatens to undermine the coalition, worsened by Washington’s transactional approach to defense burden-sharing and unilateral trade tariffs.
Political sensitivities in Tokyo, mounting pressure on Seoul to absorb higher basing costs and a massive $32 billion US weapons-delivery backlog for Taiwan are chipping away at the credibility of America’s extended deterrence umbrella.
Long-term, PIPIR cannot substitute for a binding collective defense commitment if the Pentagon continues to treat its regional partners as manufacturing instruments for its own wartime logistics rather than equal stakeholders.
Without an overhaul of the International Traffic in Arms Regulations (ITAR) export control laws and a genuine commitment to equitable technology sharing, PIPIR risks being perceived as a new form of military-industrial exploitation, not cooperation.
At worst, the initiative could fracture defense relationships, deepen regional polarization and accelerate a shift in hegemonic power toward China in the Asia-Pacific – precisely the opposite of what the initiative seeks to deter.
Ronny P. Sasmita, PhD, is senior international affairs analyst at the Indonesia Strategic and Economic Action Institution.
