The Office of the United States Trade Representative (USTR) on January 16 released findings from its Section 301 investigation into China’s alleged efforts to dominate the maritime, logistics and shipbuilding sectors.
Section 301 refers to a provision of the 1974 Trade Act that allows the U.S. Government to take action against foreign trade practices that are deemed unfair or discriminatory.
The USTR claims that China provides substantial subsidies to its shipbuilding industry, which poses a threat to U.S. interests. As part of its response, the USTR proposed implementing port fees for Chinese-made vessels.
In response, China’s Ministry of Commerce (MOFCOM), Ministry of Foreign Affairs (MFA), and the China Association of the National Shipbuilding Industry (CANSI) expressed strong dissatisfaction with the USTR’s actions.
A spokesperson for MOFCOM stated that the USTR’s findings are based on unfounded accusations against China, adding that the growth of China’s shipbuilding industry has been fueled by a robust industrial system, a highly skilled workforce and an open business environment, rather than so-called non-market practices. MFA spokesperson Guo Jiakun condemned the USTR’s actions as “purely protectionist.” CANSI also urged the USTR to rectify its mistakes quickly to prevent further damage to the global maritime industry.
In fact, there is little to no direct competition between the Chinese and U.S. shipbuilding industries. The U.S commercial shipbuilding sector has been in decline since the 1980s, and currently, the primary competition in the international shipbuilding industry exists between businesses from China and the Republic of Korea.
Though China’s modern shipbuilding industry began relatively late, it developed fast. After China adopted the reform and opening up policy in 1978, the shipbuilding industry began receiving international orders, allowing it to emerge on the global stage. Following China’s accession to the World Trade Organization in 2001, the industry entered a period of rapid growth.
As of 2023, China’s shipbuilding industry had achieved multiple milestones: its output, newly received orders, and orders on hand accounted for 50.2 percent, 66.6 percent, and 55 percent of the global total, respectively. This was the first time that all three major indicators exceeded 50 percent.
There are two primary reasons for the rapid growth of China’s shipbuilding industry.
First, advancements in research and development, as well as technology, have improved China’s capabilities. The country can now construct nearly all advanced types of ships. In 2023, China secured the top position globally for new orders in 14 out of 18 major ship types.
Second, the relatively low cost of labor and materials in China contributes to more competitive shipbuilding prices in the international market. These factors combined have propelled China to a leading position in the global shipbuilding industry.
China’s shipbuilding industry has made great contributions to globalization by meeting the transportation demands of international trade. This has further promoted trade prosperity and ensured the stability of international industrial and supply chains.
During periods of boom in the global shipping market, China has been able to promptly address the demand for new ships, alleviating shortages in shipping capacity.
Conversely, during market downturns, the industry leverages its cost advantages and technology innovation to maintain a certain scale of production. This approach helps stabilize supply in the global ship market and ensures the smooth operation of the global shipping industry.
It is understandable for the United States to seek to reverse the decline of its shipbuilding industry. However, the Section 301 investigation is counterproductive, ultimately harming the United States more than benefiting it, and is unlikely to achieve its intended goals. –The Daily Mail-Beijing Review news exchange item
