A shipyard at the port in Taicang, in China's eastern Jiangsu province, last month. (AFP/Getty Images)
A single Chinese state-owned shipbuilder produced more commercial vessels by tonnage in 2024 than the entire U.S. industry has since World War II, according to a report that underscores how China has come to dominate the sector.
Foreign companies may be inadvertently fueling the expansion of the Chinese navy, according to the report from the Center for Strategic and International Studies, posing a national security threat to the United States and its allies.
“China’s shipbuilding sector has undergone a striking metamorphosis. Twenty years ago, the country was a peripheral player in the global shipyard business. Today, it dominates the industry,” the report said.
President Donald Trump has Chinese ship manufacturing in his crosshairs — his administration has proposed charging Chinese-built vessels up to $1.5 million in fees to dock at any U.S. port — as part of his pledge to resurrect American shipbuilding.
China has said it would “take necessary measures” to defend itself against any such fees. Imposing fees on Chinese ships “will ultimately fail to revitalize the U.S. shipbuilding industry,” Chinese Foreign Ministry spokeswoman Mao Ning said Monday.
The CSIS report illustrates the challenge: China has gone from producing less than 5 percent of the world’s commercial ships in 2000 to accounting for more than half of global production last year. The United States, meanwhile, accounted for 0.1 percent, according to the think tank’s analysis.
China’s emergence as a shipbuilding giant began in the early 2000s with aggressive state support. The industry has become even more important under Chinese leader Xi Jinping, who aims to turn his country into a maritime power to rival the United States. The Chinese navy — officially known as the People’s Liberation Army Navy, or PLAN — is now the world’s largest, overtaking the U.S. Navy in number of warships.
The China State Shipbuilding Corporation (CSSC) — the largest such group in the world, which is directly overseen by China’s top political and military leadership — is at the center of those ambitions.
The state-owned firm is a major defense contractor that supplies the Chinese military but also has commercial operations — just as American companies like Boeing and Lockheed Martin have both commercial and military divisions.
But in China, the line between the CSSC’s commercial and military operations is deliberately blurred as part of Xi’s national strategy to leverage the private sector to boost the military.
Container ships, bulk carriers and other commercial vessels ordered by customers in Europe and elsewhere in Asia are built in dual-use shipyards that also make aircraft carriers, nuclear-powered submarines and surface combatants, according to the CSIS’s analysis of satellite imagery.
The report found that over 75 percent of ships produced at the CSSC shipyards with the closest ties to the military were destined for foreign firms, including those in countries with close security relationships with the United States, including Denmark, France, Greece, Japan, Singapore and South Korea.
“By purchasing vessels from these yards, foreign firms have funneled billions of dollars of revenue into entities that are central to China’s naval modernization,” the report concluded.
These dual-use shipyards are helping China scale up the PLAN. A CSIS analysis last year found that China’s navy commanded 234 warships compared with the U.S. naval fleet of 219.
The PLAN’s fleet is on track to reach 425 ships by 2030, “sustained by an industrial base capable of replacing and repairing vessels far faster than U.S. yards,” the report concluded.
The close links between China’s commercial and military sectors have helped turn the country into a giant in the industry. While shipyards in South Korea, Japan and the United States have had to shutter during economic downturns, Chinese shipbuilders were sustained by orders from the Chinese navy as well as state subsidies.
South Korea and Japan, the world’s second- and third-largest ship producers, have quickly lost market share. European companies also face growing competition as China starts to make cruise ships.
Between 2019 and 2023, four CSSC-owned shipyards — from Dalian in the north to Guangzhou in the south — launched at least 39 warships, a fleet greater in tonnage than the United Kingdom’s entire Royal Navy.
Over the same period, those shipyards produced 19 million gross tons of commercial vessels, the report found. That’s almost the total annual output of South Korea’s entire shipbuilding industry.
According to Matthew Funaiole, one of the authors of the report, that means foreign firms are probably inadvertently offsetting the costs of expanding and modernizing the facilities that aid China’s military expansion.
“They are buying ships from China because China makes most of the ships in the world. It makes them quickly, and it makes them well,” he said. “When you are buying a ship from a shipyard in China, you don’t know what the profit is on the Chinese side and how those profits might be getting used to augment or subsidize military production.”
One particularly striking example involves Taiwan, the self-governing democracy that Beijing considers a breakaway province and that Xi has pledged to “reunify” with China — even though the island has never been ruled by the Chinese Communist Party.
The Taiwanese shipping company Evergreen Marine Corp. has placed several orders with the CSSC.
The CSIS calculated that 15 percent of the company’s current fleet was built at the same Chinese shipyards that produce warships specifically designed to assist an assault across the Taiwan Strait.
“The symbolism of Evergreen’s distinctive green hulls built just beside the PLAN’s Fujian aircraft carrier — named for the province from which China would launch an invasion of Taiwan — is eye-catching,” the report said.
Evergreen did not respond to request for comment.