China’s growing presence in the global shipbuilding industry has been a focus of a recent trade investigation by the US Trade Representative (USTR), launched in April 2024 at the request of US labor unions under Section 301 of the Trade Act of 1974.
The investigation highlights practices such as financial support, forced technology transfers, and labor cost management as factors contributing to China’s expansion in the sector, as per a Reuters report.
The report, expected to be released soon, suggests that China’s share of the $150 billion global shipbuilding market has grown significantly, reaching over 50% in 2023 from approximately 5% in 2000, supported by government policies and subsidies.
Meanwhile, traditional shipbuilding nations such as the US, South Korea, and Japan face mounting challenges.
China’s ascent in global shipbuilding
China’s shipbuilding industry was almost negligible in 2000, holding a meagre 5% share of the global market.
However, by 2023, its market share had skyrocketed past 50%, dwarfing the contributions of South Korea and Japan.
This growth is not solely due to market forces; government subsidies and strategic policies have played a pivotal role, as per the findings of the US investigation.
State funding has enabled Chinese firms to undercut international competition, making their shipyards hubs of commercial and military vessel production.
Beijing’s financial backing for its shipbuilders is said to have destabilised the market, forcing other nations to either adapt or lose their foothold.
China’s labour policies have also come under scrutiny. The investigation’s findings highlight how artificially suppressed wages have kept production costs low, further boosting China’s competitiveness, Reuters reported citing sources.
These practices, combined with allegations of intellectual property theft and forced technology transfers, paint a picture of a shipbuilding industry heavily tilted in Beijing’s favour.
The US response and global implications
The United States has been vocal about its concerns.
Following a USTR probe under Section 301 of the Trade Act of 1974, Washington is considering measures to counterbalance China’s influence, such as imposing tariffs or port fees on Chinese-built ships.
This comes amidst a broader strategy to revitalise the dwindling US shipbuilding industry, which now operates with just 20 shipyards compared to over 300 in the 1980s.
The investigation’s findings provide an opportunity for bipartisan action.
The proposed measures are aimed at curbing China’s dominance and addressing systemic weaknesses in American shipbuilding.
However, experts caution that rebuilding this sector will require decades of sustained investment, potentially running into tens of billions of dollars.
China’s policies also raise questions about the resilience of global supply chains.
By monopolising key industries such as maritime logistics and shipbuilding, Beijing wields significant influence over international trade routes.
This has heightened concerns in Washington and allied nations, prompting calls for diversification and strategic partnerships.
Balance in the shipbuilding industry?
Restoring balance in the shipbuilding industry is a herculean task. While tariffs and trade restrictions may provide temporary relief, they are unlikely to address the underlying structural issues.
Analysts argue that investments in innovation, workforce development, and international partnerships will be critical.
The stakes are high. For the US and its allies, maintaining a robust shipbuilding capability is not just an economic imperative but a strategic necessity.
As global trade becomes increasingly interlinked, the ability to produce both civilian and military vessels will be crucial for national security.
The post US probe reveals China’s unfair methods to dominate global shipbuilding, potential penalties loom: report appeared first on Invezz