“While any country seeking to develop its maritime capabilities should not be criticized, Beijing’s ambitions go far beyond that.”
Today, the U.S. International Trade Commission Public hearings Regarding the Section 301 investigation by the Office of the United States Trade Representative into unfair trade practices in China’s commercial shipbuilding industry. The Federation of American Manufacturing (AAM) also attended and expressed their views.
You may remember this shipbuilding survey. It happened in April 2024This comes after the United Steelworkers (USW) and allies in the American labor movement petitioned the federal government to investigate anti-competitive practices that help maintain China’s dominance in the manufacturing sector.
Decades ago, the United States was the world leader in commercial shipbuilding. Today, the industry is virtually nonexistent in the U.S. It wasn’t just China’s unfair trade policies that drove the industry overseas, but without addressing that problem, it will be virtually impossible to bring shipbuilding and its supply chain home.
At today’s hearing, AAM President Scott Paul argued:
The biggest obstacle for shipbuilding in the United States is China’s unfair trade practices. While no country should be blamed for developing its maritime capabilities, Beijing’s ambitions go far beyond that. China’s shipbuilding capabilities have been rapidly strengthened through a series of initiatives aligned with five-year plans dating back more than two decades. Support for Chinese industry identified in the petition includes policy loans from state-owned banks, equity injections and debt-to-equity conversions, below-market steel plate from state-owned steelmakers, tax incentives, subsidies, and loans from China’s state-owned export credit agency. Shipbuilding was made a pillar industry in the “Made in China 2025” plan. Beijing was only looking to dominate global commerce.
There are also legitimate concerns about the inflow of foreign capital and technology into China’s dual-use shipyards, which contribute to both civilian and military shipbuilding capabilities. China has sought this technology transfer, sometimes through unfair or illegal means, including intellectual property theft, to support its naval power expansion, a goal outlined in the 13th National Five-Year Plan in 2016. The situation has become so bad that our Navy has had to rely on Chinese-built dry docks in certain circumstances.
The practices I mentioned have enabled China to win a large portion of the world’s shipbuilding orders, with reports indicating that China has won 76 percent of such orders. Even just in April 2024This market dominance continues to have a negative impact on shipbuilders in other countries, including the United States.
We will continue to follow the USTR investigation as it progresses, and for more background on why steelworkers and their allies called for an investigation, listen to AAM’s interview with USW International President Dave McCall on the Manufacturing Report podcast.
