As China builds more naval and merchant ships, U.S. maritime experts are calling on the Biden administration to increase investment in domestic shipbuilding to catch up with Beijing.
The disparity has prompted U.S. maritime experts to call for a “Ships Act” comparable to the recently enacted “Chips Act” that supports the return of chip manufacturing to the United States.
A Ships Act would recall the U.S. effort undertaken in World War II when domestic shipyards launched more than 5,000 vessels in a war-changing torrent.
Bryan McGrath, managing director at The FerryBridge Group, told VOA Mandarin that the shipbuilding bases of the U.S. and China are simply not comparable.
“The Chinese industrial base is a behemoth, and the U.S. shipbuilding industrial base is freakishly undersized as a function of the size of America’s economy and its influence in the world,” McGrath said.
As of 2020, the U.S. Navy had 297 battle force ships, according to a report by the Congressional Research Service. China surpassed the U.S. as the world’s largest navy with an inventory of about 355 vessels, according to a U.S. Defense Department report released in 2021. The Office of Naval Intelligence (ONI) projects that China will have 400 battle force ships by 2025 and 425 by 2030.
The U.S. merchant marine fleet is falling even further behind China. The U.S. has fewer than 80 commercial ships in international service while China has more than 5,500 merchant ships, a senior U.S. Navy officer told gCaptain, a maritime news website, in May.
The U.S. Transportation Department’s Maritime Administration estimates only 1.5% of U.S. waterborne imports and exports are carried on U.S.-registered vessels. Few of those have the capacity to participate in a sealift operation, which refers to the use of commercial vessels to assist the Department of Defense with the transport of supplies, military personnel and other military assets.
The U.S. shortfall of ships is a “screaming national security vulnerability” according to an unnamed senior official quoted in a November 2021 Brookings report. China already has prepared its merchant fleet to perform as the “logistical backbone” for an invasion of Taiwan, according to a May 2022 report from the China Maritime Studies Institute.
Jerry Hendrix, a retired Navy captain and senior fellow at the Sagamore Institute, wrote in an op-ep in the National Review that the U.S. needs a “Ships Act” similar to the Chips Act that President Joe Biden recently signed.
“Chips made in America will most likely cost more than chips made overseas … but they will be available if a war were to break out, so this made strategic sense. The Chips Act passed with strong bipartisan support. For these same reasons, Congress should pass, and the president should sign,” a “Ships Act” that would increase domestic U.S. shipbuilding and ship repair capabilities, Hendrix wrote in the August 29 issue.
Strained industrial capacity
During World War II, the U.S. had more than 50 public and private shipyards that could either build or repair ships in excess of 500 feet in length. Today, it has fewer than 20, Hendrix wrote.
China, South Korea and Japan have become the world’s top three shipbuilding nations in terms of gross tonnage, according to data from Statista.
“China has 19 modern shipbuilding yards pumping out commercial and naval ships,” Hendrix wrote. “One of China’s shipyards is so large that its capacity surpasses that of all U.S. shipbuilders combined.”
According to U.S. Chief of Naval Operations Admiral Mike Gilday, the service faces challenges in adding more ships due to constrained industrial capacity.
“We have an industrial capacity that’s limited. In other words, we can only get so many ships off the production line a year,” Gilday said at a Heritage Foundation event on August 25.
Gilday’s 2022 Navigation Plan, released in July, calls for more than 350 manned ships and about 150 unmanned surface and underwater vehicles by 2045.
China’s subsidized shipbuilding
The rise of China’s shipping industry has benefited from government support. According to a study by the Center for Strategic and International Studies, combined state support to Chinese firms in the shipping and shipbuilding industry totaled roughly $132 billion between 2010 and 2018.
Michael Roberts, adjunct fellow at Hudson Institute’s Center for Defense Concepts and Technology, said U.S. commercial shipbuilders lack the orders needed to compete effectively with shipyards in other countries and receive almost no support from the government.
“The U.S. order book for large commercial ships is for less than 10 ships. In comparison, China’s order book for large commercial ships stood at 1,529 ships, number one in the world, with almost half of the global total,” Roberts told VOA Mandarin.
During World War II under the Emergency Shipbuilding Program, the U.S. rapidly built nearly 6,000 ships to transport troops and supplies to allied and foreign war zones.
Hendrix suggested the U.S. should increase the number of both shipbuilding dry docks and large shipyards, as well as redirect the contracts to small- and medium-sized yards.
“We need to do that now. In World War II, a lot of the industrialization that became very useful to us in 1942 actually began in 1939 with the long lead procurement of certain vessels that entered the fleet three years later,” Hendrix told VOA Mandarin in an interview.
However, Alex Wooley, a journalist writing on naval issues and a director at William and Mary’s Global Research Institute, believes that the U.S. will not be able to rebuild this capacity easily as the shipbuilding factories that have closed lost the essential skilled workers needed to reopen.
“Shipbuilding benefits from a sense of continuity. There is not a lot of untapped surge capacity,” Wooley said.
The U.S. shipbuilding decline began in 1981, when the Reagan administration adopted laissez-faire economic principles and eliminated shipbuilding subsidies, according to Hendrix. Countries such as China chose to increase government subsidies to help capture shipbuilding market share and fill the vacuum created by the U.S. withdrawal.
As a result, Chinese companies have become dominant across the global maritime supply chain. According to the CSIS report, China constructed over a third of the world’s vessels in 2019. They also produced 96% of the world’s shipping containers and more than 80% of the world’s ship-to-shore cranes.
Although there are hurdles to expanding shipping capacities, some U.S. shipyards have started to make infrastructure investments that could set them up to build more ships.
McGrath said Congress needs to commit significant financial resources to the shipbuilding industry to subsidize necessary investments and acquisitions as well as to incentivize the shipbuilding workforce.
Hendrix, in his opinion piece, also called for subsidies and government-led industrial policy to become part of the U.S. shipbuilding future, saying, “We can no longer follow the path of intellectual economic idealism that has led us to the present position of industrial isolation.”
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