China’s expansion in the maritime domain threatens the United States’ maritime dominance and underscores the need to assess the country’s current stance and take steps toward a more secure future, according to a new report from the Navy League.
“America’s unrivaled allure has dissolved in an increasingly unsettled international system,” said the report, China’s Use of Maritime for Global Power Demands a Strong Commitment to American Maritime. Added to the coronavirus pandemic, “Americans are facing massive unemployment and the prospect of a depressed economy akin to the 1930s. Furthermore, the recent behavior of China, including its increasing aggression in the South China Sea and the Chinese government’s much-touted Belt and Road Initiative (BRI), demonstrate that China’s intentions are intensely competitive.”
China has made greater investments in shipbuilding — an “astonishing” escalation as revealed in a June brief from the Center for Strategic and International Studies — with state support to Chinese firms in shipping and shipbuilding between 2010 and 2018 amounting to $132 billion, and this is most likely a conservative estimate.
“To China’s way of thinking, the country is poised to become a global superpower in part by dominating the global maritime supply chain and, subsequently, competing head-on to become one of the world’s most modern and powerful naval forces,” the report states. “…Meanwhile, America must grapple with how best to strengthen its much smaller, independent and privately owned shipbuilding industry in the name of national security.”
“According to industry observers, China understands it is critical as a national security issue to maintain a heavy industry in shipbuilding, in particular because it drives a range of other industries that are necessary to maintain a high level as a producing nation. Furthermore, the capabilities to build commercial ships are the ones that the Chinese are using to be able to mass produce their Navy ships.”
India, France, Japan and South Korea have also used subsidies in recent years to “sustain, protect or bail out shipyards and shipping investments,” the report notes, while the United States “plays by completely different rules, as subsidies for commercial shipbuilding ended nearly 40 years ago. Only small loan guarantees and grants for smaller shipyards exist today.”
With maritime domination — including shipbuilding and majority ownership of oceangoing commercial ships and ownership or part ownership of marine terminals at key ports on strategically important trade lanes — “China can shape global trade to its liking in times of peace and, in times of conflict, leverage an overwhelming advantage in global maritime logistics built up primarily at the expense of U.S. importers.”
In the meantime, the U.S. “has seen a sharp decline in its international maritime fleet, whereby less than 200 U.S.-flagged vessels are represented in an oceangoing cargo fleet of more than 41,000 ships.”
Sixteen countries rank higher than the United States in shipbuilding. Last year, the top shipbuilder, China, had 1,291 ocean-going ships under construction while the U.S. was only building eight. “The loss of blue-water U.S.-flagged vessels over the last decades has also resulted in the loss of thousands of mariner jobs,” the report adds.
The report called the Jones Act, which was enacted after World War I to bolster the nation’s shipbuilding and maintenance capabilities and to ensure manpower and logistics during times of conflict by requiring all vessels transporting cargo between U.S. domestic ports to be built, owned, crewed and registered — or flagged — in the United States, “central to deterring inevitable efforts by China to enter U.S. domestic maritime markets if the U.S. coastwise laws went away.”
“The thousands of smaller vessels of the domestic fleet that make up the lion’s share of Jones Act vessels ply the nation’s coastlines, ports and waterways, creating something of a commercial maritime ‘ecosystem’ that includes the mariner workforce, shipbuilding and ship operating,” the report notes. “The diverse mix of vessels serve, collectively, as a strategic buffer that both supports the U.S. shipping industry while also providing a host of critical maritime services in our ports and waterways, as well as important national security protections.”
China’s investments across the maritime domain, from shipbuilding to international shipping, “are a challenge to the United States, if not a warning that America cannot rest on its history and must continue to prioritize, invest in and protect its own domestic maritime industrial base.”
The report recommends a focus by military and shipping industry experts on reinvigorating the blue-water vessel industry and expanding current cargo preference laws.
It encouraged passage of the bipartisan Energizing American Shipbuilding Act of 2019, introduced in the House by Rep. John Garamendi (D-Calif.) and in the upper chamber by Sen. Roger Wicker (R-Miss.), which directs the Federal Energy Regulatory Commission (FERC) to require specified percentages of liquefied natural gas exports to be transported on vessels built or retrofitted and documented in the United States, and directs the president to require specified percentages of crude oil exports to be transported on such ships.
“The legislation aims to spur the construction of new ships, which, by extension, could generate thousands of new shipyard jobs, while positively impacting the domestic production side of the U.S. manufacturing and maritime industries,” the report said.
“Another alternative previously explored by the Navy is the option of supporting the development of coastwise services of dual-use vessels, or commercial ships with military utility, including roll-on/roll-off (RoRo) vessels, trailerships or the hybrid ConRos, which are vessels that combine features of RoRos and container ships,” the document continues. “Such ships would alleviate ground transportation congestion while also being quickly available to support a major deployment of military equipment through participation in the Voluntary Intermodal Sealift Agreement program — a program in which 73% of the non-tanker Jones Act fleet participates.”
The report stressed that “in the context of China’s goal of dominating the global maritime supply chain, the United States and its allies must develop and implement a strategy to deny China success.”
“It must be a whole-of-government and whole-of-industry approach. We must take inventory of today’s American maritime industry, preserve what we have, identify what we need and chart a path forward. It is not a question of matching dollar-for-dollar Chinese government financial support. It is more a question of how we and our allies scale up our defense maritime industrial base to prevent China from achieving the hegemony it seeks through its maritime investments.”