Why is China losing its shipbuilding dominance? Trump or global slowdown?

Business Standard

17-07-2025

The longstanding dominance of China in the global shipbuilding industry has weakened sharply in the first half of 2025. Latest industry data, as cited by the South China Morning Post, shows that Chinese shipyards — which traditionally account for the largest share of new ship orders globally — have recorded a steep fall in new business this year.
According to Clarksons Research, new ship orders for Chinese shipyards plunged 68 per cent year-on-year to 26.3 million deadweight tonnes (dwt) in the first six months of 2025. This marks one of the steepest declines in recent years.
In contrast, South Korea — world's second-largest shipbuilding nation — saw a relatively modest drop of 7 per cent over the same period, receiving new orders totalling 14.2 million dwt, the report said.
Who is replacing China's shipbuilding dominance?
Although South Korea also experienced a drop in orders, it narrowed the gap to China in relative terms. China's share of global new ship orders in the first half of 2025 fell from 75 per cent to 56 per cent year-on-year. South Korea's share rose from 14 per cent to 30 per cent over the same period.
Although China still remains the largest volume player, this represents a substantial rebalancing of the global shipbuilding market. Experts included in the report suggested that Korean and Japanese shipyards have benefited from shipowners' decisions to build boats outside of China based on increased geopolitical tension.
South Korea's major players, including Hyundai Heavy Industries (HHI) and Hanwha Ocean, have also increased their presence in the US market. Both companies have been bidding for contracts related to the maintenance and overhaul of US Navy vessels since 2024. In April this year, HHI signed an agreement to share technology and cooperate with Huntington Ingalls Industries, the largest military shipbuilder in the US.
Are Trump's tariffs hurting Chinese shipyards?
The report pointed to a combination of factors behind China's falling market share. One of the clearest drivers has been the series of measures by the Donald Trump-led US administration targeting China's shipbuilding sector.
In April this year, the US imposed steep fees on ships owned, operated or built by Chinese companies entering American ports. Additional tariffs on Chinese-made equipment used in shipbuilding, including ship-to-shore cranes, have further strained Chinese shipyards' competitiveness.
While these restrictions have met with resistance from industry groups, market data suggests they are beginning to have an effect. Beyond ship construction, Chinese shipyards are also losing ground in repair and maintenance services. Data shows China's share of repair work for very large crude carriers (VLCCs) fell from an average of 70 per cent between 2021 and 2024 to around 50 per cent in the first half of 2025.
Is weakening global demand affecting Chinese shipbuilding?
The US restrictions alone do not fully explain the shift. Analysts cited by South China Morning Post note that a cyclical decline in global shipbuilding demand is also impacting Chinese yards disproportionately. During the demand boom between 2021 and 2024, excess orders typically spilled over from capacity-limited Korean and Japanese yards to China's more flexible shipbuilders. However, with global new orders slowing in 2025, that spillover effect has diminished.
Shipowners reportedly prefer Korean or Japanese-built vessels as they fetch higher resale values on the second-hand market, further compounding the downturn for Chinese shipyards.
Despite the current slump, larger Chinese shipyards are expected to remain resilient. However, the outlook is less certain for smaller, private yards with weaker order books.
What lies ahead for global shipbuilding?
Chinese-built vessels still comprise 23 per cent of the total global fleet currently in service, Clarksons' data shows. But with US restrictions intensifying and South Korea deepening shipbuilding cooperation with Washington, industry analysts suggest that China's shipyards may face prolonged pressure.