Shipbuilding and a Shifting Maritime Balance
A look at U.S. shipbuilding efforts, China's dual-use fleet, new maritime sanctions, and why battery breakthroughs matter for military competition.
This update will focus on shipbuilding. At the Atlantic Council we’ll be holding a public event on May 1st at 10 AM featuring Senator Mark Kelly, Senator Todd Young, and Congressman John Garamendi on the SHIPS for America Act. I’m looking forward to seeing some of you there.
Retired Captain Thomas Shugart just started a navalist Substack, The Shugart Update. The first post examines “Chinese global maritime power—its scale, its origins, and its implications for free societies.” Matthew P. Funaiole, Brian Hart, and Aidan Powers-Riggs of CSIS recently launched a report, Ship Wars: Confronting China’s Dual-Use Shipbuilding Empire that “offers a detailed policy roadmap for how Washington can disrupt China’s military-civil fusion strategy, erode China’s market dominance, and increase shipbuilding capacity within the United States and key partner countries.” I also recently wrote an analysis for ChinaTalk on how the PRC civilian fleet could enable a distributed, real-time radar and sonar sensor network around Taiwan and conduct drone strikes, mine-laying, and other operations.
An update on the PRC’s rhetoric surrounding “两国和两国人民的根本利益” [The fundamental interests of the two countries and their peoples]. The PRC initially adopted this rhetoric following the Prigozhin mutiny, as The Report noted at the time. Since then, the PRC has repeated this formulation for other, non-Russian countries, including (at least) Nauru. Finally, the authoritative People’s Daily Chinese-language service eliminated its Russia-related section a few months ago. Interestingly, only five countries are now covered by the PD’s world affairs update: Japan, the United States, South Korea, and Australia/New Zealand (grouped together).
I plan to write analyses on China-Russia economic ties and 两国和两国人民的根本利益 over the next month or so, although I haven’t decided the best format for both pieces. I’ll also likely publish analyses on AI and energy, U.S. dual-use trade, and shipbuilding for the Atlantic Council. Thank you for reading the China-Russia Report. I look forward to seeing some of you soon.
Picture (ChatGPT 4o prompt): A picture of a submarine, a destroyer, a container ship, unmanned surface vessels, and First-Person View (FPV) quadcopters
Shipbuilding
Strengthening US shipbuilding: Congress’s role in maritime revitalization
Senator Mark Kelly, Senator Todd Young, and Congressman John Garamendi discuss the SHIPS for America Act and its implications for the future of US national security.
Event: Thu, May 1, 2025 • 10:00 am ET 1400 L Street NW Floor 11 Washington, DC 20005
Comment: Public event with Senator Kelly, Senator Young, and Representative Garamendi.
“This CSIS report explores the close ties between commercial and military shipbuilding in China, focusing in particular on the role that foreign firms are inadvertently playing in facilitating the expansion and modernization of the PLAN. Utilizing data accessed through intelligence platforms S&P Global and Datenna, as well as satellite imagery and other open-source materials, this study categorizes each of the 307 Chinese shipyards active from 2019 to 2024 into four tiers that reflect their degree of integration with the country’s military industrial ecosystem:
Tier 1 (Very High Risk): CSSC-owned shipyards known to produce warships for China’s navy.
Tier 2 (High Risk): CSSC-owned shipyards that build commercial ships but maintain close ties to military projects, personnel, and state funding mechanisms.
Tier 3 (Moderate Risk): Shipyards owned by other state firms besides CSSC, which can be mobilized to support national security needs.
Tier 4 (Lower Risk): Private or foreign-owned shipyards that have limited documented military involvement but are subject to China’s regulatory and political control.”
“A collective democratic loss of maritime control over much of the globe’s oceans could mean a threat to the historical underpinning of the modern free world as we know it, with consequences that may be difficult to foresee. On our current trajectory we may find out someday that maritime power, like oxygen, is something we have long taken for granted, but whose absence causes us to be able to think of little else.”
USTR Order
“Today, USTR took targeted action to restore American shipbuilding and address China’s unreasonable acts, policies, and practices to dominate the maritime, logistics, and shipbuilding sectors. These responsive actions come after a year-long Section 301 investigation, which included USTR convening a two-day public hearing, receiving nearly 600 public comments, and consulting with government agency experts and USTR cleared advisors.”
Comment: See below for the impacts on specific ports (source: author’s calculations + the Census Bureau)
The Allies and Shipbuilding
US will propose dual-use shipbuilding to Japan, navy chief says – Nikkei Asia
To counter China, allies should explore 'all options' to boost capacity, Phelan says
South Korea Hopes Shipbuilding Will Give It an Edge in Trade Talks – NYT
As it faces the possibility of a 25 percent tariff on its exports, South Korea has taken notice of President Trump’s stated goal to revive U.S. shipbuilding.
“On the other hand, the United States appears unwilling to embrace a collective approach to naval shipbuilding and sustainment with its allies and partners to compete with China. Decades-old protectionist legislation, “buy American” quotas, and technology transfer restrictions continue to limit meaningful industrial cooperation with allies. Whether and how the United States resolves this dilemma will determine the outcome of U.S.-Chinese naval competition, and with it the future of the United States in the Indo-Pacific.”
The PRC’s Shipbuilding-Drone-Battery Nexus
“China is easily the world’s largest civilian and military shipbuilder, accounting for over half of all merchant vessels constructed in 2023, as measured by gross tonnage. Its fishing fleet is estimated to exceed 560,000 vessels, with its deep-water fishing fleet comprising about 3,000 ships. It has also constructed 50% more tons of military ships over the last decade than the United States, according to analysis from US Navy Captain (ret.) Thomas Shugart.
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China’s civilian fleet also holds latent subsurface military potential, as it could launch potentially thousands of unmanned underwater vehicles (UUVs). These UUVs could employ active sonar capabilities to monitor the Taiwan Strait and nearby waterways for submarines, as well as conduct mine-laying or mine-countermeasures missions. This is not a far-fetched scenario: China is already using nominally civilian cargo ships to target subsea fiber optic cables around Taiwan. (China’s larger deep-sea vessels are better suited for launching UUVs, which are heavier and bulkier than airborne drones.)
Finally, the Chinese civilian fleet could enable a targeting mesh for the Chinese military by providing real-time radar data. While shipborne civilian radars are weaker than military-grade radars, their open-array radars nonetheless range from 64 to 96 nautical miles; larger ships with greater on-board power and higher mastheads can “see” farther. Next-generation solid-state radars — distinct from solid-state batteries — offer significant performance improvements over traditional magnetron radars. While each civilian vessel has only limited radar coverage, the Chinese navy could theoretically aggregate information from each ship to build a real-time, composite picture of maritime domain awareness, especially when used in conjunction with other platforms like commercial satellite imagery. This information could enable the PLA to track and target coalitional surface fleets.”
Major Advances in E.V. Batteries Are Announced by Chinese Company – NYT
CATL, the world’s largest maker of batteries for electric vehicles, described breakthroughs that could make E.V.s more competitive with gasoline-powered cars.
Comment: Battery breakthroughs in energy density and charging are happening on an almost monthly basis. Don’t sleep on this: batteries already have major military implications and their role is only becoming more important. CATL was listed as a Chinese military company by the U.S. DoD in January – very likely because they were helping the PLAN deploy an advanced battery on a diesel-electric submarine.
“Solid-state batteries offer even greater capabilities than lithium-ion batteries, including greater energy density, capacity, and range. Crucially, solid-state batteries are advantaged over lithium-ion batteries at preventing fires, which are a major risk aboard submarines. While solid-state batteries have yet to be commercialized due to cost and technical challenges, military customers — including in China — are not as price-sensitive. The development of solid-state batteries could therefore offer substantial performance improvements for both diesel-electric submarines and unmanned systems below, on, and above the surface.”
“[T]he main thrust of the U.S. policy response to the battery crisis must be the urgent commercialization of next-generation technologies where the United States can actually enjoy a competitive advantage. Doing so will be a tall order, but it is achievable at reasonable cost. The United States should redouble funding for research and development (R&D), target incentives and public financing for demonstrating and scaling up commercial production of next-generation batteries, and use public procurement to create protected markets for innovative technologies to gain a market foothold.”
Until next time,
Joe
Joe Webster is a senior fellow at the Atlantic Council and editor of the China-Russia Report. This article represents his own personal opinion.
The China-Russia Report is an independent, nonpartisan newsletter covering political, economic, and security affairs within and between China and Russia. All articles, comments, op-eds, etc represent only the personal opinion of the author(s) and do not necessarily represent the position(s) of The China-Russia Report.