[By columnist Su Kui of Guanchacn]

Recently, the Office of the United States Trade Representative (USTR) announced the final plan to impose punitive fees on Chinese ships. Although it has been significantly relaxed compared to the draft proposal in February, this is still a new high point in protectionism in the history of international trade. The policy is so absurd and unreasonable that it can be said to be unprecedented.

In particular, the previous proposal to charge up to $1.5 million per port call for any operator who owns or reserves Made-in-China vessels was shocking and once again exposed the ugly faces of American politicians to the world.

Currently, media and various comments focus on the impact of the plan and possible future directions. It should be noted that the legal basis of the plan is the so-called Section 301 investigation report published by the USTR on January 16, 2024. If we analyze this investigation report spanning two American administrations and the union's petition that triggered the investigation, we can see the desperation and hatred of American politicians from both parties. Docking charges are just a clumsy attempt at framing; such immoral strikes have no chance of success.

Ridiculous Charges

On March 12, 2024, the United Steelworkers Association and five other union organizations submitted a petition to the U.S. Trade Representative's office, requesting an investigation into certain unfair and discriminatory policies and behaviors in shipping, logistics, and shipbuilding sectors dominated by China under Section 301 of the 1974 Trade Act.

The petition first lamented the decline of America's shipbuilding industry, which is now a mere shadow of its former glory. From after World War II until 1975, the U.S. once had the largest shipbuilding capacity in the world. In just 50 years, the number of commercial shipyards in the U.S. decreased by 70%, resulting in the loss of tens of thousands of jobs. Currently, the U.S.' annual commercial shipbuilding output is negligible compared to the world's total new tonnage (only 0.1%).

The petition also listed some figures comparing the gap between China and the U.S. in shipbuilding, such as China's global new ship order share being less than 10% in 2000 but reaching 47% in 2022, even higher than the combined shares of Japan and South Korea. China produces more than 1,000 ocean-going ships annually, while the U.S. produces fewer than 10. By tonnage, China's total production in 2014 was 104 times that of the U.S., and by 2022, this figure had increased to 356 times.

The petition attributes these gaps to government policies in China, accusing the "Five-Year Plans" starting from 2001, including the "10th Five-Year Plan" and "11th Five-Year Plan," as well as the "Made in China 2025" formulated in 2016, which listed shipbuilding as a pillar or strategic industry with clear development goals. This is the most public evidence of China's intention to dominate the global shipbuilding industry. Its conclusion is that the biggest obstacle to the revival of America's shipbuilding industry is China.

On April 17, 2024, the U.S. Trade Representative's Office launched a formal investigation under Biden's administration. On January 16, 2025, just three days before Biden left office, they released the so-called investigation report. The report concluded that China's dominance in shipbuilding places American shipbuilders at a competitive disadvantage, reducing competition and business opportunities, and more importantly, creating vulnerabilities in America's economic dependence on China. China's allegedly unfair or discriminatory trade practices mainly manifest in several aspects:

· Top-down planning with specific quantity and quality targets, clearly reflecting China's ambition to dominate the international shipbuilding and shipping industries.

· Achieving these plans through unfair cost compression and non-market "overcapacity," such as steel costs and labor costs.

· Setting domestic substitution targets at the expense of foreign competitors.

Anyone can see how baseless these accusations are—they are groundless slanders without factual basis. Industrial policies are not synonymous with planned economies; they are more about creating policy synergy, guiding development directions, shaping social expectations, and guiding relevant departments to maintain macro-policy consistency and continuity. Due to political infighting in the U.S., industrial policies are deliberately demonized to cover up systemic failures in its industrial system. China operates under a market economy, where planning and goals are not mandatory orders but rather incentives for development.

Low costs are naturally advantageous for developing countries, akin to how developed countries enjoy technological and capital advantages. Different stages of countries have their relative strengths, which should not be criticized as faults. Developed countries have enjoyed these advantages as well; they cannot pull up the ladder after climbing up themselves. Low costs are the ladder for developing countries to ascend.

China's domestic substitution follows the premise of respecting natural market selection, whereas the notorious Jones Act is the pinnacle of forced domestication. In 1789, the first Congress of the United States passed legislation taxing differently for ships built domestically versus abroad and stipulated that only ships built domestically, owned by Americans, and captained by Americans could be registered as American ships. Thus, the U.S. is the originator of shipbuilding protectionism worldwide. The Jones Act of 1920 further legally reinforced the requirement for "domestic transport of domestically built ships."

Accusing China of dominating the shipbuilding industry is more out of jealousy. The clearest evidence is Trump's executive order signed on April 9, titled "Restoring American Dominance in Shipping." The U.S. does not believe that dominating an industry is inherently wrong; rather, it believes that if it is not dominated by the U.S., it is wrong. The Chinese government has never proposed a plan to dominate an industry but merely aims to develop itself. Dominating reflects zero-sum thinking, while developing embodies a win-win mindset.

China's success in the global shipbuilding industry is the result of natural market competition, not due to planning or willpower. Demanding that China voluntarily give up achievements obtained through effort is sheer bandit logic. From China's perspective, it is impossible to accept bullying, let alone abandon them. As the saying goes, "If you do not take what is offered to you, you will suffer the consequences."

So-called dependency and vulnerability are merely backstabbing. The Chinese government cannot command American shipping companies to purchase Chinese-made ships. Only when it benefits them will American enterprises choose to buy Chinese-made ships. Similarly, Chinese shipbuilders will only build ships for American enterprises if it is profitable. Understanding the history of America's shipbuilding industry and current industry data, the accusation that China hinders the revival of American commercial shipbuilding is purely baseless, a fabricated charge.

American Voices

On March 6 and 8, the U.S. Trade Representative's Office held two days of hearings. Numerous shipping companies, international organizations, and representatives from various American industry associations submitted opposition statements. On March 7, Hans Laue, CEO of GisHolt Shipping Agency in Florida, submitted an opinion letter to the U.S. Trade Representative's Office. This brief but sharp and accurate opinion letter rebutted the investigation documents and proposed solutions, truly representing the voice of the people.

Snapshot of GisHolt Shipping Agency's opinion letter submission

Firstly, he believed that the so-called investigation into policies and actions in America's maritime, logistics, and shipbuilding industries, supposedly aimed at dominance, was seriously mistaken and lacked any evidence proving that China intentionally targeted these areas in the U.S. China, along with South Korea, Japan, and Turkey, only filled the massive shipbuilding market gap driven by global consumption growth. We should thank these countries.

Secondly, implementing the proposed punitive charges would at least lead to the collapse of numerous small and medium-sized American businesses and the unemployment of tens of thousands of workers.

Thirdly, if the purpose of the investigation is to revive America's shipbuilding industry, then this investigation is entirely wrong. Anyone with basic knowledge of shipping knows this is impossible because the U.S. lacks expertise, technical workers, engineers, shipyards, and labor force. There hasn't been a commercial shipbuilding industry in America for over 100 years; it is absolutely impossible to return overnight. It took China about 30 years to achieve this capability.

Lastly, he suggested that if the goal is to target China, don't punish overseas shipping companies purchasing Chinese-made ships. Don't attempt to revitalize America's shipbuilding industry; it's a dead end (as stated in the original text). He hoped the U.S. Trade Representative's Office would indefinitely halt the implementation of the proposed measures and conduct further research into their short-term and long-term consequences. If implemented, it would be Armageddon for all industries and people in American society (as stated in the original text).

Once Upon a Time

America's shipbuilding industry has had two glorious moments. The first was from 1815 to 1857, before the Industrial Revolution. Leveraging abundant timber resources and a long tradition of wooden ship construction, America built the fastest mail ships and their evolved versions—the Clipper ships—globally at that time. Compared to Europe, America's shipbuilding industry had stronger market competitiveness. On the eve of the Civil War, approximately two-thirds of America's foreign trade goods were transported by American-built wooden ships.

However, past successes often become stumbling blocks for the next revolution. After the Industrial Revolution, Britain's iron ships quickly surpassed America's wooden ships because America's wooden ship industry transitioned too slowly to metal ships. By 1905, 73% of America's foreign trade fleet still relied on wind power, while Britain's wooden ships accounted for less than 20%.

The second peak occurred around World War II. In 1936, President Roosevelt passed the Merchant Marine Act, strongly supporting the shipbuilding and shipping industries. The U.S. established the Maritime Administration, offering government subsidies for shipbuilding and operations. For example, shipbuilders could apply for "Construction Differential Subsidy (CDS)," which could cover up to 50% of the cost difference between domestic and foreign shipbuilding. This policy actually acknowledged that the cost of building ships in America was roughly double that of foreign countries.

During World War II, the U.S. conducted the largest-scale shipbuilding operation in history. Among over 100 shipyards, more than 5,000 vessels were built. Between 1941 and 1945, 18 American shipyards produced 2,751 Liberty ships, symbolizing the immense industrial strength of the U.S. during the war.

On September 27, 1941, the first 14 emergency-built ships were launched, with the ceremony personally hosted by Roosevelt. In his speech, he quoted a line from Patrick Henry's 1775 speech: "Give me liberty, or give me death." These ships would bring freedom to Europe, hence the name "Liberty Ships," and September 27 became known as "Liberty Fleet Day."

America's assembly-line production method greatly accelerated ship manufacturing. On average, a Liberty ship could be launched in 42 days. The record was set by the ship Robert E. Peary, which went from keel laying to launching in just 4 days, 15 hours, and 30 minutes. By 1943, three Liberty ships were launched daily. At its peak, the U.S. built more merchant ship tonnage in three years than the total global merchant ship tonnage before the war.

After the war, American-controlled merchant ship tonnage accounted for 70% of the world's total, inflating American shipbuilding confidence to unprecedented levels. However, this advantage gained during wartime was not sustainable and lacked commercial viability. Success during the war masked long-standing problems in America's shipbuilding industry and created unrealistic expectations for both the industry and the government.

Trend chart of total new ship tonnage delivered globally vs. the U.S.

Fading Sunlight

After the war, Britain, Japan, and South Korea successively dominated the global shipbuilding industry, shattering America's illusion completely.

Due to less damage from World War II, Britain managed to retain its shipbuilding industry, and geographically being close to mainland Europe, it benefited from the post-war recovery of European economies. From 1946 to 1956, Britain led the global commercial shipbuilding industry, especially in the early post-war period when nearly half of the world's commercial ship tonnage was made in Britain.

As European and Japanese shipbuilding industries recovered, leveraging advanced technology and cost advantages, Japan surpassed Britain in 1956. Meanwhile, America's commercial shipbuilding industry had already become inactive in the international commercial shipbuilding market, primarily surviving on some government shipbuilding projects.

In 1968, after Nixon took office, he revised the 1936 Merchant Marine Act from Roosevelt's era. The bill authorized the construction of over 300 ships within ten years, providing substantial financial support for the shipbuilding industry and expanding the subsidy policy to more ship types. To incentivize shipyards to enhance competitiveness, the subsidy ratio was planned to gradually decrease from 50% of the ship's construction cost to 33%. Coupled with the increase in domestic oil exploration boosting demand for domestic shipping, America's shipbuilding industry experienced a revival-like resurgence in the 1970s.

In 1980, America's total shipbuilding tonnage reached 1.24 million tons, ranking second in the world, behind Japan (5.19 million tons), increasing by 110% compared to 1975 (588,000 tons). However, this was the twilight of the setting sun; the gap with the top-ranked Japan was significant, and far from the global dominance of pre- and post-WWII eras. Its main buyers were still domestic shipping companies, and it had not regained competitiveness in the international market.

In the 1980s, American shipbuilders began to believe that the core dilemma facing American shipbuilding was not due to high domestic shipbuilding costs or relatively low productivity, but rather subsidies provided by foreign governments. These subsidies artificially depressed the construction costs of foreign ships.

Based on this judgment, starting in 1984, America led the establishment of a working group within the OECD to draft agreements to eliminate shipbuilding subsidies and create a fair competitive market environment. However, ironically, other OECD countries eventually approved the anti-subsidy agreement, while under pressure from domestic shipbuilding companies, the U.S. Congress demanded special treatment, ultimately preventing America from becoming a signatory to the agreement.

This kind of inconsistent behavior was repeated recently. The Obama administration actively promoted TPP as an economic alliance against China, but the Trump administration abandoned it upon taking over, believing it to be disadvantageous to the U.S. Eventually, Japan picked up the pieces and cleaned up the mess.

Historically, the U.S. has consistently subsidized its own shipbuilding industry, flip-flopping and refusing to fulfill international obligations. Today, it hypocritically accuses China's subsidy policies. What a fine example of allowing state officials to burn down others' houses! America's so-called anti-subsidy policy is actually intended to hinder the development rights of latecomer nations and is a pretext for hatred towards China.

U.S. shipbuilding subsidy support programs

Framing

After Reagan's inauguration in 1981, he soon canceled most of the subsidy programs. For a dying shipbuilding industry like America's, this was like pulling the rug out from under it, sealing its coffin.

After this, American shipbuilding never experienced another significant rebound. In just five years, shipyards decreased by 40%, and employment dropped by one-third. The total tonnage manufactured in 1985 (209,600 tons) compared to 1980 (1,242,400 tons) decreased by 83%, amounting to only 36% of 1975 (588,000 tons).

From the historical development of the global shipbuilding industry, America's decline in shipbuilding is mainly attributed to its allies. Long-term protectionism has prevented the industry from being tested in the market, and discontinuity in U.S. government policies also played a role. However, the most critical reason is that America is increasingly unsuitable for manufacturing development; industrial relocation is an objective law.

No matter what, American commercial shipbuilding had become insignificant since the 1960s. By 1965, its global share had fallen below 2%, and at that time, China had not yet entered the international commercial shipbuilding industry. How could this rise and fall have anything to do with China? It's like having a clear alibi when American commercial shipbuilding died, and although Japan, the EU, and the UK were present, most evidence points to America committing suicide. Even though 50 years have passed, America can still accuse China of being a "murderer," which is strange indeed.

Change in U.S. share of newly built ship tonnage globally since 1950

In 2023, America's commercial shipbuilding tonnage ranked 14th globally (65,000 tons), with its peers at the same level being Indonesia (76,000 tons) and Turkey (79,000 tons). Considering that America mainly builds ships for protected domestic shipping companies, it is no longer capable of competing in the international shipping market. Investigating unfair practices in a market where the U.S. does not participate is extremely unreasonable. By any standard, there is no competitive relationship between America and China (32.86 million tons); forcing China into the category of competitors and even accusing it of hindering American development is nothing but jealousy and hatred-driven scapegoating.

Global ranking of major countries' shipbuilders by total tonnage in 2023

Hatred Campaign

According to the legislative purpose of Section 301 of the U.S. Trade Law, Section 301 investigations target foreign government violations of trade agreements or implementation of unreasonable, improper, or discriminatory policies that burden or restrict U.S. trade. China's entry into the shipbuilding industry lowered vessel purchase costs and thus reduced logistics costs, benefiting American goods' sales worldwide. Where is the burden or restriction on U.S. trade?

In May 2024, a research institute in South Korea published a report stating that "China's comprehensive value chain competitiveness in shipbuilding last year (2023) first surpassed South Korea." This is an objective evaluation by China's strongest competitor—South Korea—of China's shipbuilding industry. China's success in shipbuilding has never been achieved through underhanded means but through comprehensive value chain competitiveness.

Regarding the logistics sector involved in the investigation, China is entirely innocent. The EU concentrates the world's largest shipping companies; among the top five global shipping companies, four belong to Europe, collectively accounting for 52% of the global market. Just these four giants control more than half of the global market share. Mainland China has only COSCO (China Ocean Shipping Company) entering the global top ten shipping companies (approximately 10%), while the remaining giants belong to Japan, South Korea, Singapore, and Taiwan. From another perspective, such an industrial structure forms an industrial synergy between China and the EU, building a community of shared interests that may help resist American bullying and coercion in shipping and shipbuilding sectors in the future.

If the high concentration of shipping companies increases the logistics costs for American companies, the investigation should target these EU shipping giants rather than focusing on the Chinese mainland. The willingness of EU international shipping giants to place shipbuilding orders in China is clearly beyond the control of the Chinese government; it is the choice of the market. The outdated rhetoric about overcapacity is nonsense. Such targeting of China is despicable.

Moreover, many of these shipping giants use ships built in South Korea, and Chinese-built merchant ships dominate the shipping market more as a future expectation. Taking typical large container ships (over 10,000 TEUs) in international trade as an example, the transportation capacity (in TEUs) of Chinese-built ships operated by the top ten shipping companies accounts for only 26%, while South Korea accounts for 60%. However, regarding ships currently under construction, China accounts for 73%, and South Korea accounts for 23%. Further analyzing the data of Chinese-built ships operating on U.S. routes, among 1,073 container ships involved in U.S. routes, only 23% are Chinese-built, and even COSCO accounts for only 46%. This also shows the openness of the Chinese market.

China has not been a major player in world shipbuilding for long, and its actual influence is not as great as imagined; much of it is potential for the future. China only began entering the international shipbuilding market after reform and opening-up. In 1985, China accounted for only 1% of global commercial ship new tonnage, and even by 2000, it was only 4%. Starting in 2010, China's new commercial ship tonnage was roughly equal to South Korea's, and they competed neck and neck. It was only after 2021 that China stably surpassed South Korea.

In terms of all ship types, China's share of the global in-service ship population is only 23%, rising to 25% when including ships under construction. If calculated solely based on ships under construction, China's share reaches 53%. Considering the value, China's share of all built and under-construction ships will not exceed 20%, roughly corresponding to China's population proportion. China is a super-large-population country with a population larger than the entire Western world (about 1.1 billion people). It is not surprising that any scale of any industry in China is comparable to the whole of Western countries. Therefore, it is inappropriate to compare China's industrial scale with that of a specific country.

Clearly, America's targeted strike is a hysterical precaution, not retaliation after causing harm. If Chinese shipbuilding poses a threat to American trade, such a threat is not real; conversely, South Korea might pose a real and practical threat. This is like prematurely sentencing someone for a potential "illegal" act in the future, which is extremely absurd.

Share of various ship types built and under construction in China

If Trump's government indiscriminately imposed tariffs out of selfishness and ignorance, there was at least some element of economic sovereignty involved, albeit narrow-minded foolishness. However, America's proposal regarding charging for Chinese shipbuilding and shipping is a bottomless hate campaign.

Shakespeare once said, "Beware of envy, for it is a green-eyed fiend." American politicians envy China's remarkable achievements in shipbuilding in a short period. As the saying goes, "Even a common man is blameless for possessing treasures." Jealousy breeds hatred, and once hatred takes root in one's heart, it grows wildly, distorting one's soul and leading to eventual loss of control.

Jealous people are pitiable as well as detestable. Because hatred campaigns do not truly benefit them; instead, they bring more pain after failure. More importantly, obsession blinds them to the joy of working hard together toward success.

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Original source: https://www.toutiao.com/article/7501117322279764480/

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