The United States has discovered that the widespread practice of selling discarded electronics to companies that ship it to China for “recycling” (and to save on the much higher cost of doing it in the United States) has had some unpleasant and unexpected side-effects. The most critical one, from a military point of view, is that a lot of military electronics are junked. Now technically it is illegal to just toss (most) classified electronics in the trash, to be hauled away. The law specifies how such secret electronic trash is supposed to be destroyed and shipping the stuff off to China is not on the approved list (various forms of shredding are). The Chinese knew about this careless disposal of military electronics and alerted Chinese firms to put aside certain types of electronic trash imported from the United States. Even if the discarded components were not the latest (and most highly classified) models they still provided Chinese intelligence (and defense manufacturers) with much useful information.
The other military (and commercial) problem was that Chinese counterfeiters also bought certain electronic components from the recyclers for minimal refurbishment and elimination of identifying data. The now “new” component is used as a cheap replacement for the real thing in larger bits of equipment that are then sold as new parts for aircraft, ships, vehicles and even weapons systems. This involves using counterfeit serial numbers and other phony markings.
In the United States a growing number of people are becoming aware of how dependent America is on foreign components for military, and commercial, equipment. This is nothing new. As so many other nations began developing their economies since the 1960s a growing number of cheaper sources for raw materials and manufactured goods have shown up. Many of these have driven American suppliers out of business, leaving the U.S. dependent on foreign sources for more and more items. While there are some restrictions on using foreign made components or raw (or refined) materials that can be brought in, this has not really slowed down the growing dependence on imported items. This has reached the point where China, for example, is the source of key components of a large number of weapons and key items of military equipment. This has led to a call for laws to limit this dependence. It is believed that the major problem with this would be the additional cost of buying from the more expensive American supplier.
A lot of these counterfeit components end up in American military equipment. This fraud includes a lot of bogus items where convincing looking counterfeit chips are simply labeled as "military grade" (the most robust and durable of that item available). These sell for more than "consumer grade" (the most common) and "industrial grade" (for use in factories, where failure can cause more damage and expensive down time). Failure in military grade parts can get people killed, just as counterfeit aircraft spare parts are a growing problem in commercial aviation.