The Chinese Dragon – the New Lord of the Seas: How Liberal Globalism Destroyed American Maritime Dominance!

America's shipbuilding industry has faced a strategic crisis. Decades of decline caused by failed globalism policies have turned the United States from the world's leading shipbuilder in 1975 into today's minor producer ranked 19th globally. Meanwhile, China has methodically expanded its shipbuilding over the past two and a half decades, achieving world dominance through state industrial policy, massive subsidies, and strategic investments. The US currently produces fewer than five large commercial vessels (i.e., large ocean-going ships displacing over 1,000 gross tons) per year, while China builds over 1,700 ships annually. Moreover, Beijing now accounts for more than 50% of the global shipbuilding market compared to about 5% in 2000 (Figure 1).

Figure 1. Leading shipbuilding countries in the world.

Source: https://prosperousamerica.org/...

The destruction of American civilian shipbuilding began in the 1980s, driven by liberal-globalist economic policies of Reaganomics, which deprived the industry of critically important state support. In 1982, the Reagan administration terminated federal shipbuilding subsidies, leading to the near-instant collapse of the US commercial shipbuilding market. After the Reagan administration canceled shipbuilding subsidies, US production volume fell from about 20 large ocean-going commercial vessels per year to just five over the next eight years, with America's share of world trading tonnage dropping from 1.1% in 1988 to just 0.25% by the end of the 1990s.

Deprived of government subsidies, American shipyards suddenly had to compete without assistance against foreign shipbuilders who continued to receive significant subsidies from their governments. It is no surprise that US shipyards could not compete under such unequal conditions. New orders for commercial vessels dried up (sharply reducing from dozens per year to nearly zero by the end of the decade), as domestic shipowners turned to cheaper foreign shipyards.

At the same time, the mass closure of shipyards and layoffs led to the loss of about 75,000 jobs in shipbuilding and a reduction in industrial capacity. Decades of broader deindustrialization exacerbated the decline, as many raw materials and components needed for ship construction ceased to be produced in the US due to the contraction and outsourcing of the American manufacturing base. Essentially, American companies began outsourcing ship production to foreign shipyards, further undermining domestic capabilities. The elimination of state support and increased dependence on international markets seriously undermined American shipbuilding, leaving the country largely dependent on foreign production.

By the early 1990s, American shipbuilding had become excessively dependent on Navy contracts, with commercial vessel production virtually ceasing (Figure 2).

Figure 2. Dynamics of military (red) and civilian (blue) vessel production in the US, 1950–2015.

Source: https://prosperousamerica.org/...

China's rise as a global shipbuilding superpower was no accident. Since the early 2000s, Beijing has implemented a targeted strategy aimed at dominating commercial ship production and related maritime shipping sectors through state initiatives. For example, the US Trade Representative calculated that Chinese shipyards received at least $91 billion in subsidies from 2006 to 2013. The Center for Strategic and International Studies estimated that from 2010–2018, China received $132 billion in assistance in the form of state bank lending, financial aid, and cheap steel.

China's dominance in shipbuilding was driven by targeted state consolidation and a military-civil fusion strategy. Regarding consolidation, Beijing merged its largest shipbuilding and shipping enterprises to achieve economies of scale and reduce domestic competition.

In 2019, two state shipbuilding conglomerates—China State Shipbuilding Corp. (CSSC) and China Shipbuilding Industry Corp. (CSIC)—were merged into a single giant called CSSC. This merger created the world's largest shipbuilding grand with over 300 subsidiaries, controlling more than 20% of global shipbuilding capacity, ensuring unparalleled scale effects and production efficiency.

In parallel, China consolidated its major shipping lines: in 2016, COSCO Group and China Shipping Group merged, forming China COSCO Shipping—one of the world's largest shipping companies—which included merging their shipbuilding divisions into COSCO Shipping Heavy Industry. These mergers give Chinese shipyards access to a domestic market and more efficient coordination of commercial and naval projects.

Of paramount importance is that most leading Chinese shipyards operate as dual-use enterprises, building both commercial vessels and warships under the "military-civil fusion" (MCF) doctrine. This model blurs the line between civilian and defense production, allowing one to directly support the other. For example, CSSC's extensive network of subsidiaries includes key shipyards like Shanghai's Jiangnan and Hudong-Zhonghua, which build commercial vessels for export as well as modern warships for the PLA Navy. By using the same docks, workforce, and supply chains for both purposes, China can rapidly expand its fleet with relatively low additional costs.

As a result, the efficiency of China's shipbuilding industry has reached such levels that the Middle Kingdom surpassed the US in the number of naval vessels by the early 2020s. Yes, this incredible historical event has already occurred! The US has ceased to be the largest naval power, while China can already boast the world's largest and fastest-growing navy: as of 2023, it had 234 warships compared to 219 in the US Navy (Figure 3).

Figure 3. Number of ships in the navies of China and the US.

Source: https://prosperousamerica.org/...

Thus, a landmark historical event has occurred. The US has lost its role as a maritime hegemon, on which the country's overall strategic power was based in the "long" 20th century. China is becoming the new lord of the seas and is already using its increased maritime power for strategic purposes. We will discuss this in the next article.