Chinese Defense Companies Soar as Pakistan Touts Arms Purchase
Shares of Chinese defense companies rallied Monday, after Pakistan said it intends to buy one of the Asian power's most-advanced fighter jets as a part of major arms purchase.
Shares of AVIC Shenyang Aircraft Company — the maker of China's J-35 stealth fighter jet, which is the centerpiece of the package — soared by their 10% daily limit in Shanghai, extending gains for the third consecutive session. The stock led a rally across other defense names such as Aerospace Nanhu Electronic Information Technology Co., whose shares jumped as much as 15%.
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China's maritime lead a security threat, say ‘Zero Point Four' authors
A significant decline in the number of U.S.-flagged vessels and the collapse of domestic shipbuilding have created vulnerabilities in national security, say two of the co-authors of 'Zero Point Four: How U.S. Leadership in Maritime Will Secure America's Future.' James Watson and Carleen Lyden Walker said the U.S. maritime industry is at a critical moment. U.S.-flagged ships have declined to a 0.4% (200 ships) of the estimated 55,000 oceangoing vessels serving the global supply chain. 'We have lost our [maritime] leadership as a nation and we can recapture that if we decide to recognize the incredible impact of maritime security on national security, economic, energy, and food, climate and workforce,' Walker told FreightWaves in an interview. Watson and Walker said the U.S. has become so dependent on foreign-manufactured ships that it has created vulnerability in supply chains and risks shortages in military maritime than 90% of the world's goods and energy travel by ship, and most people don't understand the U.S. dependency on the maritime industry, the authors said. 'The big part of why we wrote the book … is all the opportunities that actually do exist for investments by Americans into American ships, but also industries that involve the oceans, that involve what we call the fourth industrial revolution, the use of AI, the use of the developments in science and technology that ought to be opportunities for America to basically leapfrog China,' Watson said. Watson is a retired Rear Adm. in the U.S. Coast Guard and is currently an independent consultant providing business development services to maritime clients. Walker is co-founder and managing partner of the Maritime Accelerator for Resilience and co-founder and CEO of the North American Marine Environment Protection Association.'Zero Point Four' was published in March 2024. In addition to Watson and Walker, the book was co-authored by global supply chain specialist Jonathan Kempe; technology and sustainability economist Nishan Degnarain; enterprise resilience veteran Rich Mason; and Anuj Chopra, managing director of the MaritimESG Middle East Project Management LLC. While the trade war between China and the United States appears to be cooling off in recent weeks, the nation's push to revitalize the nation's shipbuilding industry is gaining momentum. In February, the White House proposed port fees for China-built, -owned and -operated ships docking at American ports. The fees aim to minimize China's maritime dominance and help kick-start U.S. shipbuilding. The initial proposal called for vessels operated by Chinese companies to pay a $1 million port call fees and ships built in China would have to pay a $1.5 million fee per port call. The proposal now calls for fees based on net tonnage and number of containers carried. The Office of the U.S. Trade Representative also recently announced exemptions from the fees for ships carrying liquified natural gas. The USTR is accepting comments through July 7 from the maritime community on the impact of port fees associated with Chinese ships. New fees proposed by the USTR are set to take effect on Oct. 14. President Donald Trump also signed an executive order on April 9 that aims to boost the U.S. international maritime presence, which has been in decline for decades. On April 20, a bipartisan bill — the Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act of 2025 (the SHIPS Act) — was introduced in Congress with the aim of expanding the U.S.-flag international fleet by 250 ships in 10 years, while enhancing U.S. competitiveness and making more investments in the maritime workforce.A predecessor bill, the SHIPS for America Act of 2024, garnered bipartisan support last year during the Biden administration. Walker said placing fees on Chinese-built ships might ultimately hurt American consumers instead of creating more domestic ship production in the U.S. 'Passing the cost of our deficiency on to the consumer, which is what will happen with these taxes, if you will, on Chinese-built ships, I don't know how viable that is,' Walker said. 'It's like tariffs: The ultimate payor is going to be the American consumer.' Walker said a more viable proposal could be a tariff hike on U.S.-flagged ships doing repair work in shipyards in China. The tariff could be an impetus for U.S. ships to be repaired in domestic shipyards. U.S. officials floated the idea of imposing a 200% duty for work carried out on many U.S.-flag ships at yards in 'countries of concern,' according to the SHIPS Act. 'I think that one of the possibilities is restricting U.S.-flagged Jones Act ships from doing ship repair in China, which they do, and that could be a first step,' Walker said. Of 80,000 U.S. port calls each year, only a very small percentage are currently by U.S.-registered ships. '[The U.S.] intentionally walked away from its shipbuilding capability in the 1980s … and to blame China for recognizing an opportunity and capitalizing on it, I think is the wrong cast,' Walker said. 'I would rather see us say, 'Well, look, China in the early 1990s is when they decided to become a shipbuilding nation.' In the last 35 years, they have become the dominant shipbuilding nation with about 60% of the order book. How they got there also needs to be recognized.' Watson said for various reasons — including cost and efficiency — many companies in the U.S. in the 1970s and 1980s decided to outsource shipbuilding to countries such as Japan and South Korea initially. 'I think what happened was they just said, 'Well, we can just sacrifice that industry and we can buy ships from Korea and Japan, because they're building fine ships over there, and use our open registries to help the world globalize even more and focus on military shipbuilding,' Watson said. 'Then the Cold War ended and we looked around and took our peace dividend, balanced the budget again, and realized we didn't have a commercial shipbuilding industry anymore. So we just stuck … with the plan to buy ships from Japan and Korea, and then I think China saw the opportunity.' Walker and Watson said maritime security not only impacts national security, it impacts energy security, environmental security, economic security and workforce development. 'We think we can lead the world, but we probably shouldn't basically give away our designs and our technology to the cheapest place in the world to build,' Watson said. 'I guess just going to my position on the USTR thing … some of the things that they're doing probably have a time and a place and maybe now is the time and the place to do it.' Watson said it's critical that the government produce programs to restore the maritime industry in the U.S. 'You've got to have a program that creates investment here,' Watson said. 'If you look at the CHIPS Act, for example, where you actually have an act of Congress instead of effectively an executive decision of an agency, then you can put in some provisions that are bankable. You can have companies invest in a legislative initiative with a lot more security that it won't flip in four years compared to an executive mandate, like a tariff or a penalty on Chinese shipping.' The ultimate goal the U.S. government should be looking for is bringing in more mariners and reinvigorating the country's industrial shipbuilding complex, Watson and Walker said. 'It's the ships that come first,' Watson said. 'Then that causes an interest in terminals and shipyards and everything else. So there's been a lot of talk about … 'We've got to be more involved in the Panama Canal, we've got to stop [China's] Belt and Road Initiative.' If we just had a robust marine industry, a ship-operating industry, if we had merchant mariners, if we had the lead on marine technology, we would naturally want to own the terminals and the ships and have stakeholdings in great shipyards to service our ships.' The post China's maritime lead a security threat, say 'Zero Point Four' authors appeared first on FreightWaves.
