Hanwha invests 5 billion dollars in the U.S. to build naval vessels, with the shipbuilding industry betting on the American market.

The Korea Times reported on its front page that a major South Korean shipbuilding company, Hanwha, will invest 5 billion dollars to build naval vessels at a shipyard in Philadelphia, USA.

South Korea is betting on the US shipbuilding industry, mainly due to considerations of alleviating economic pressure, maintaining alliance relations, and responding to geopolitical pressures:

1. Strategic choice under economic pressure

South Korean shipbuilding industry is tempted by US orders. The US has required South Korean companies to use American propulsion systems under Section 303 of the Defense Production Act, and has promised 28.7 billion dollars in warship orders. This "market for technology" model allows South Korean companies to gain access to the US defense industry, but they must accept conditions such as technology transfer and financial control.

2. Need to maintain alliance relations

South Korea is trying to strengthen military cooperation with the United States to consolidate the alliance relationship and avoid becoming "the second Japan". The United States has used laws such as the Jones Act to restrict South Korean shipbuilding industry from using Chinese steel, forcing South Korean companies to turn to the US supply chain. This strategy can both alleviate the problem of insufficient US shipbuilding capacity and weaken China's competitiveness in the high-end shipbuilding field.

3. Geopolitical balancing

Under the context of Sino-US competition, South Korea is trying to balance great power relations by participating in the competition for the Arctic shipping routes (such as building icebreakers). The United States is forcing South Korea to make choices between US military orders and the Chinese market through measures such as banning the use of Chinese steel, which is essentially using South Korea as a "strategic pawn" to contain China.

4. Risks and challenges

South Korea needs to invest 35 billion dollars and transfer key technologies, but faces American legal barriers (such as the Jones Act), risks of technology loss (such as isolation of welding robot systems) and reliance on Chinese steel. If it cannot balance the Sino-US relationship, it may face the dual pressure of losing orders and soaring costs.

Original: www.toutiao.com/article/1841654830291980/

Statement: The article represents the views of the author.