- China’s shipbuilding industry is massive, pumping out commercial and military vessels.
- The blur between commercial and military shipbuilding has given China an edge in the industry.
- New research notes that foreign buyers are fueling China’s shipbuilding prowess.
The Chinese shipbuilding industry eclipses the rest of the world by capacity. The juggernaut boasts a dominant commercial sector and substantial growth in its navy.
A new research paper from the Center for Strategic and International Studies think tank shows that foreign buyers are inadvertently fueling China’s naval rise.
The authors, Matthew Funaiole, Brian Hart, and Aidan Powers-Riggs, found that “a disproportionate share of China’s commercial shipbuilding occurs at shipyards that are closely intertwined with the country’s sprawling defense industrial base.”
Due to the close ties between China’s commercial shipbuilding, which is largely supported by foreign buyers, and China’s military shipbuilding, “foreign firms have funneled billions of dollars of revenue into entities that are central to China’s naval modernization,” they wrote.
In the new CSIS report, China’s shipbuilding is broken into four tiers, with higher ones having closer ties to military building. While Tier 1 and 2 yards represent just 15% of active shipyards in China, they produce 40% of its commercial output by tonnage. And over 75% of the production at these yards goes to foreign buyers outside of China or Hong Kong.
Additionally, the authors explained, “foreign firms have also provided China’s defense contractors with key dual-use shipbuilding technology through joint ventures, licensing agreements, and direct purchases” that have helped China overcome technological obstacles as it expands its capacity.
Even when military and commercial production aren’t linked, China’s overall shipbuilding capabilities, techniques, personnel, and infrastructure give it an edge.
The report also said that China’s industrial policies, too, are causing issues for the US and its allies. Japan and South Korea are losing market share, and China’s expansion into the high-value markets like cruise ships is hurting European shipbuilders.
And that comes, the CSIS report notes, as “China’s key naval shipbuilders continue to benefit from access to financial markets in the United States and its allies.”
The capacity gap
China’s industry has over 230 times the capacity of the US, per Office of Naval Intelligence estimates, representing over 50% of the total global shipbuilding capacity. South Korea and Japan are second and third, respectively, to China. US officials and analysts have pointed to these Pacific allies as examples of what’s possible in shipyard modernization and effectiveness.
Some of the biggest shipbuilding capacity in China comes from yards operated by the China State Shipbuilding Corporation and its subsidiaries.
The CSIS researchers note that “the firm built more commercial vessels by tonnage in 2024 than the entire US shipbuilding industry has built since the end of World War II.”
China’s vast industry, many shipyards, and investments have allowed it to grow a regional navy into a formidable force. The People’s Liberation Army’s Navy is the largest in the world, with a battle force of over 370 ships and submarines, per the Pentagon’s report on China’s military released last December. That includes more than 140 major surface combatants. The PLAN is on track to increase that number to about 425 by the end of the decade.
US shipbuilding, on the other hand, has atrophied, making revitalizing the industry an uphill battle.
The US builds top warships, from modern, technologically advanced carriers to stealthy subs, but they’re often delivered late and over budget. Getting the industry back on its feet is a priority, but it won’t happen overnight.
And there’s a lot of ground to cover to compete with China’s shipyards.
These numbers have raised alarms in the US Navy and among leadership in DC, including in the Trump administration. There have been calls for strengthening the US shipbuilding industry and getting to the root of major delays and cost overruns of big warship programs and discussions on how to solve longer-term issues related to a smaller workforce and hollowed industrial base.
In a China context, there are concerns that the US can’t build the naval force it needs for a war and that it will not be able to sufficiently repair or replace damaged and destroyed vessels as it could during the Second World War.
The CSIS findings highlight the continued growth in China’s capacity and the impact that it has on the US and its allies.
The report offers a few policy recommendations, including severing US financial and business ties with CSSC, leveraging diplomacy to encourage other countries to limit their ties, and making investments in US shipbuilding capacity.
Key to the latter is a focus on the shipbuilders, particularly the workforce. Lawmakers, experts, and officials have said that the loss of skilled workers and the inability to recruit new workers due to a lack of sufficient investment in wages and career opportunities are central to this issue.
The US Navy’s plans to continue building and maintaining its fleet will come with a hefty price tag — $40 billion each year through 2054, according to the US Congressional Budget Office’s assessment of the Navy’s 2025 shipbuilding plan.
But right now, the US Government Accountability Office has determined that “none of the seven shipbuilders that construct Navy battle force ships are currently positioned to meet the Navy’s ship delivery goals.”
