Fact Check
China's shipbuilding benefits the world
By Lan Xinzhen  ·  2024-05-06  ·   Source: NO.19 MAY 9, 2024

Six hundred years ago, Zheng He, a Chinese explorer, commanded seven great voyages across Asia and Africa. At the time, almost 100 years before Christopher Columbus set sail for the Americas, Zheng's fleet was the largest in scale, with the largest number of ships and sailors, and made the longest voyages in the world. China's shipbuilding industry began to lag behind that of the West in the 18th and 19th centuries, but has made remarkable progress in the past few decades. China is now once again becoming the world's largest shipbuilding country and is having a strongly positive impact on the global shipping industry.

According to figures from the Ministry of Industry and Information Technology, China's shipbuilding industry has ranked first in the world for 14 consecutive years in terms of three major indicators—ships it completes, orders for ships it currently holds and new orders it is receiving. The total tonnage of ships it built in 2023 hit 42.32 million deadweight tons (DWTs), an increase of 11.8 percent year on year. New orders and holding orders were 71.2 million DWTs and 139.39 million DWTs, up 56.4 percent and 32 percent, respectively.

In the past few decades, China's shipbuilding industry, through independent research and development (R&D) and technology innovation, has overcome technical difficulties in building hi-tech vessels, including liquefied natural gas carriers, large cruiseliners, chemical tankers and large container ships. In addition, China's share in the global ocean transportation market is continuing to grow, maintaining the world's top position for many consecutive years. This not only demonstrates the competitiveness of China's shipbuilding industry, but also promotes the diversified development of and competition within the global shipping industry. 

The rise of China's shipbuilding industry has accelerated the development of supporting industrial chains, including ship design, manufacturing and maintenance, providing more job opportunities and growth drivers for the world. China's shipbuilding industry focuses on green design and manufacturing, and has promoted the R&D of low-carbon and zero-carbon ship types, contributing to environmental protection and sustainable development. The high-quality vessels made in China have improved the efficiency and safety of the global shipping industry and supported world trade and economic development.

The development of the Chinese economy has driven the rapid growth of foreign trade and provided a greater market space for the shipping industry. China's status as a major shipping country and a major country of trade in goods has ensured the stability of the global industrial chain and supply chain.

However, the United States has an incorrect bias against China's shipbuilding industry. On April 17, the Office of the U.S. Trade Representative launched a Section 301 investigation targeting China's maritime, logistics and shipbuilding sectors. Section 301 of the U.S. Trade Act of 1974 provides a statutory means by which the U.S. imposes trade sanctions. The U.S. alleges that China engages in a wide range of acts and policies that "unfairly capture market share, distort global markets and advantage Chinese enterprises," which restricts U.S. commerce by "contributing to declines in U.S. shipbuilding capacity, production and market share."

Actually, the Section 301 investigation launched by the U.S. against China's shipbuilding industry is using speculation to disrupt normal market competition. It seems the purpose is to suppress China's development, part of widespread U.S. efforts to constrain China's growth in the past few years.

Considering the competitiveness of China's shipbuilding industry, the overall impact of the investigation is expected to be limited. At present, the number of holding orders in China's shipbuilders is sufficient. Moreover, the U.S. shipbuilding industry is so highly dependent on outsourcing that the chances of reshoring are slim. In the meantime, the holding orders from U.S. shipowners account for a relatively small proportion of orders held in Chinese shipyards, so the impact of order transfer will also be limited. For these reasons, it is unlikely the investigation will undermine China's top position in the global shipbuilding industry.

Copyedited by G.P. Wilson 

Comments to yanwei@cicgamericas.com 

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