Foreign Ship Orders Fuel China’s Naval Expansion

A recent report by the Center for Strategic and International Studies (CSIS) sheds light on a growing concern within the global maritime industry—foreign ship orders placed at Chinese shipyards are unintentionally fueling China’s naval expansion. These shipyards, many of which are deeply integrated with the country’s defense industrial base, are not only constructing commercial vessels but also contributing to China’s broader military ambitions.

This overlap between commercial and military shipbuilding enables a seamless transfer of technology, labor, and infrastructure that supports rapid naval modernization. As foreign buyers invest in commercial vessels, they inadvertently sustain and enhance the very facilities that also produce warships for the People’s Liberation Army Navy (PLAN). The dual-use nature of these shipyards blurs the line between civilian commerce and military capability, creating strategic advantages for Beijing.

The scale of China's shipbuilding capacity is unmatched globally. As of 2024, China is home to more than 1,200 shipyards, ranging from large-scale state-owned enterprises like China State Shipbuilding Corporation (CSSC) to private and regional facilities. These shipyards collectively account for over 40% of the global shipbuilding market share. In contrast, the United States has fewer than 200 active shipyards, many of which are small or focused primarily on repair and maintenance rather than new construction. The largest U.S. naval shipyards, such as Huntington Ingalls and General Dynamics, are primarily dedicated to military vessels, leaving limited bandwidth for commercial production.

This disparity not only gives China a numerical advantage in terms of output but also allows it to scale production at a pace the U.S. and its allies currently struggle to match. Chinese shipyards benefit from centralized government support, low labor costs, and vertically integrated supply chains, which collectively drive down costs and reduce build times.

The CSIS report underscores the urgency for governments and industries in the West to reassess their procurement strategies. Analysts argue for targeted policy measures that could reduce financial entanglement with Chinese shipbuilders. These measures might include offering incentives for domestic construction, tightening regulations on dual-use technologies, and strengthening oversight of foreign investments in critical infrastructure.

Ultimately, the findings present a compelling case for rebuilding national shipbuilding capabilities and fostering alliances that prioritize secure, transparent supply chains. As tensions rise in strategic waters across the Indo-Pacific, the consequences of inadvertently empowering potential adversaries through commercial activity are becoming increasingly clear.