- China’s global shipbuilding share exceeded 50% in 2023, driven by government subsidies.
- U.S. shipbuilders’ market share has dropped below 1%.
- The findings could prompt penalties from the Trump administration.
According to a report by Reuters, the Biden administration has concluded an investigation into China’s dominance in global shipbuilding, logistics, and maritime sectors. The findings, initiated under Section 301 of the Trade Act of 1974, accuse China of employing unfair policies and practices to secure its position in these industries.
China’s Shipbuilding Expansion
The investigation revealed China’s rapid rise in the shipbuilding industry, growing its market share from 5% in 2000 to over 50% in 2023. This growth is linked to significant government subsidies and strategic policies aimed at sidelining foreign competitors, particularly from the United States. Beijing also “severely and artificially suppressed China’s labor costs in the maritime, shipbuilding and logistics sectors,” that person added, citing excerpts of the report.
Findings and Economic Implications
The report outlines how China’s financial support, labor cost suppression, and intellectual property policies have contributed to its industrial dominance. It suggests implementing tariffs or port fees on Chinese-built vessels as potential countermeasures, although such actions would follow public consultations. “The development of relevant industries in China is the result of technological innovation and active market competition of enterprises, thanks to its complete industrial manufacturing system and huge domestic market,” said Liu Pengyu, spokesperson for the Chinese embassy in Washington.
Historical Context and Bipartisan Consensus
The findings underscore longstanding bipartisan concerns about China’s industrial strategies. Both the Biden and Trump administrations have used Section 301 investigations to address issues related to Chinese trade practices. The current report aims to pave the way for comprehensive measures to revitalize U.S. industries.
Challenges to Revitalization
Rebuilding the U.S. shipbuilding industry, which has shrunk to just 20 shipyards from over 300 in the 1980s, is expected to take decades. Experts caution that addressing the sector’s decline will require substantial financial investments, enhanced technological capabilities, and cooperation with allied nations.
China’s Response
China has dismissed the findings, attributing its growth to market competition and technological innovation. Beijing has urged the U.S. to remove existing tariffs and refrain from imposing new ones, warning of potential retaliatory measures to protect its interests. “We’re way too dependent on China in particular. We do not have surge capacity. We have very little shipbuilding capacity, and for a superpower that’s completely unacceptable,” Paul said.
Future Prospects
The report emphasizes the importance of decisive action to counter China’s dominance while acknowledging the scale of the challenges ahead. It highlights the need for strategic initiatives, including legislative support, to rebuild and expand U.S. shipbuilding capacity.
Path to Revitalizing the U.S. Shipbuilding Industry
The trade investigation serves as a critical starting point in addressing the U.S. shipbuilding industry’s decline. While significant hurdles remain, the findings provide a roadmap for revitalizing the sector and reducing dependence on foreign manufacturing.
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Source: Reuters
