New Delhi: The Indian Navy had plans to become a 200-ship strong force by 2027. But in 2019, it revised its target downwards to 170, citing an acute financial crunch. Contrast this to the Chinese. Over the past two decades, the People’s Liberation Army Navy (PLAN) has grown from a modest coastal force into a regional juggernaut with frigates, destroyers, submarines and aircraft carriers being constructed and commissioned at record speed.
As of 2022, the PLAN was operating a battle force fleet of 351 ships, surpassing the US Navy’s 294.
According to the Washington-based think tank Center for Strategic and International Studies (CSIS), China has already overtaken the US Navy in terms of hull count, and is rapidly closing the gap in fleet tonnage and key technologies like Vertical Launch System (VLS) missile cells. By 2024, China’s surface combatants deployed half the VLS cells of their US counterparts, up from just a quarter in 2019.
This stark growth is compounded by the fact that China’s naval forces are primarily concentrated in the Indo-Pacific, whereas US forces are globally dispersed.
Since 2010, China has dramatically reduced the tonnage gap with the US from roughly 4 million tons to under 1.6 million tons.
China’s emergence as a global shipbuilding powerhouse began with key policy changes that were initiated in the early 2000s. Recognizing that the rapid growth of containerized maritime trade would be a boon for global shipbuilders, Beijing began developing ambitious plans to position Chinese firms at the forefront of the industry. In 2002, Zhu Rongji, China’s premier and chief economic architect at the time, visited the headquarters of CSSC, where he declared that China would seek “to become the largest shipbuilding country by 2015”.
Since 2003, China has issued at least 25 national-level plans involving the shipbuilding sector.
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China’s shipping dominance: A global shift
Having produced less than 5 percent of the world’s tonnage in 2000, Chinese shipyards now account for more than half of total commercial production.
Formerly dominant Japanese and South Korean shipbuilders have since 2011 experienced declining production as shippers from around the world now place more orders with Chinese shipyards to upgrade their fleets.
Katherine Tai, the former US Trade Representative in a report made public in January said the US today ranks 19th in the world in commercial shipbuilding, and builds less than five ships each year. China, on the other hand, builds more than 1,700 ships annually.
“In 1975, the United States ranked number one, and we were building more than 70 ships a year,” Tai said.
Tai launched a probe in April 2024 at the request of United Steelworkers and four other unions under Section 301 of the Trade Act of 1974, which allows the US to penalise foreign countries that engage in “unjustifiable” or “unreasonable” acts, or burden US commerce.
The Trump administration is trying to push back with a proposal to raise the entrance fee levied on maritime operators with Chinese-built ships calling on US ports to up to USD 1.5 million.
California-headquartered think tank Rand Corporation in an August 2024 report said that, from 2000 to 2023, Chinese shipbuilders secured contracts for 21,600 vessels with a total weight of 270.4 million compensated gross tonnes. “This work was won across 917 different shipyards and produced 132 unique types of ships. Completions rose steadily through the early 2000s, from 266 in 2003 to a peak of 1,797 ships built in 2011. While completions dipped after 2011, reaching a recent low of 741 in 2020, average compensated gross tonnage has increased from 8,749 CGT in 2003 to 17,095 in 2023,” the report said.
It added that naval shipbuilding, on the other hand, experienced its lowest production rates from 2003 to 2009, having 250,000 active tonnage under construction during those years. That number doubled in 2010, reaching a peak in 2014 of over 800,000 active tonnes.
CSSC and the military-civil fusion strategy
At the heart of China’s success is the China State Shipbuilding Corporation (CSSC), the world’s largest shipbuilder, which built more commercial vessels by tonnage in 2024 than the entire US shipbuilding industry has since World War II. Operating under the firm grip of China’s political leadership, CSSC plays a pivotal role in China’s “military-civil fusion” strategy, which seeks to integrate China’s commercial and defence sectors.
This strategy enables China to leverage commercial revenues to subsidise military shipbuilding, allowing for rapid expansion of the PLAN at lower costs.
The CSIS report cited earlier noted that foreign buyers are responsible for the vast majority of shipbuilding production across China’s industry, but especially at Tier-1 and Tier-2 yards. Over 75 percent of CSSC’s production serves international clients—including US allies Japan, Greece, and Denmark, besides Taiwan.
It added that this global trade indirectly supports China’s naval modernization. CSIS also said that, by purchasing vessels from these yards, foreign firms have funneled billions of dollars of revenue into entities that are central to China’s naval modernization.
“Given the substantial overlap in material inputs, production techniques, personnel, and infrastructure required for both commercial and military shipbuilding, commercial revenues effectively subsidize China’s naval expansion,” the report said.
Adding, “By offsetting fixed costs, these earnings enable Chinese shipyards to scale military production more efficiently and at lower marginal expense. Even when military and commercial production is not co-located, the shared ownership structures between many of the leading commercial and military shipyards enables assets and processes to be easily transferred across the civil-military divide.”
The report went on to say, “Foreign firms have also provided China’s defence contractors with key dual-use shipbuilding technology through joint ventures, licensing agreements, and direct purchases. These transfers have been essential to enabling the PLAN to overcome important technical hurdles in areas like marine propulsion.”
It added, “Since Xi Jinping’s ascent to power in 2012, Beijing has accelerated efforts to transform China into a strong maritime power.”
But while it ranks among the world’s leading defence contractors, CSSC generates a large share of its revenue from civilian production. In 2023, only 23 percent of its revenue came from defence, well below the global average of 56 percent for major defence firms. In contrast, American giant Boeing, one of the world’s leading commercial aircraft manufacturers, depends on defence for over 40 percent of its revenue, CSIS notes.
(Edited by Amrtansh Arora)
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