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Yahoo
a day ago
- Business
- Yahoo
A shipbuilding behemoth is rising in China. By scale, nothing else comes close.
Two of China's state-owned shipbuilding groups are finalizing a major merger, building a juggernaut. The deal has been in the works since 2019 and will extensively grow CSSC, the world's largest shipbuilder. CSSC accounts for a massive share of global shipbuilding and features dual-use yards for military vessels. A Chinese state-owned shipbuilding group was already the world's biggest. Now it's finishing up a merger with its main domestic rival, resulting in an absolute juggernaut of an industry force. China has been quantitatively dominating the global shipbuilding game, leaving the US and its allies playing catch-up. The merger only tightens Beijing's grip on the industry, handing China a critical advantage in generating commercial and naval power. Last week, trading in the shares of China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation (CSIC) was suspended as CSSC moves to absorb CSIC, which is ultimately being delisted. CSSC previously received approval from the Shanghai Stock Exchange to absorb its competitor in a substantial share-swap deal. It marked the latest step in a merger that's been in the works since 2019, a move that will create a new streamlined shipbuilding behemoth. Though the companies merged years ago, industrial overlap continues to be an issue, as is unresolved internal industry competition. The mega merger cuts duplicated costs and redundant functions for more efficient, more coordinated operations. Post merger, Chinese media reports, CSSC will control some $56 billion in assets while generating $18 billion in annual revenue. Some estimates are higher. CSSC is China's — and the world's — largest shipbuilding group. It built more commercial vessels by tonnage in 2024 than the entire US shipbuilding industry has built since the end of the World War II, according to a report on Chinese shipbuilding earlier this year from the Center for Strategic and International Studies, a Washington-based think tank. And CSIC was the country's second-largest. Both are state-owned, meaning their operations and developments are overseen by the government, and they were originally part of the same firm until split in 1999 under Chinese Communist Party reforms. The reunion between the two is expected to result in a bigger, more powerful CSSC. It signals China's push for a more consolidated approach to its commercial and military shipbuilding. "When it's all said and done, CSSC will be the largest listed shipbuilding company in the world by a considerable margin, in terms of both assets and revenue," Matthew Funaiole, a CSIS senior fellow with the China Power Project, told Business Insider. "And maybe more importantly, it will have the full backing of the Chinese state and its industrial policy might." That kind of state backing means global rivals face not just a company, but an arm of Beijing's industrial strategy. A massive shipbuilding empire CSSC alone is a commercial shipbuilding giant, boasting expansive shipyards, factories, and research institutes controlled by political and military leaders in Beijing. It includes 84 subsidiaries and employs over 200,000 people across shipbuilding, engineering, research and development, and other areas, CSIS said earlier this year. Comparatively, the entire US shipbuilding industry directly employs just over 100,000 people, per available data. When the companies first began the merger process, CSSC and CSIC oversaw, by some estimates, $120 billion in combined assets — almost four times as much as South Korean rival Hyundai Heavy Industries. The companies shared resources, including financing, technologies, and personnel. The merger itself is part of China's long-standing push to consolidate its shipbuilding, as the "central government is trying to reduce horizontal competition between companies within its domestic market in order to be better positioned to extend its dominance over global markets," Funaiole said. And while the number of active Chinese shipyards has decreased since peaking in 2009 at just over 300 — as of 2024, it was around 150 spread across a handful of major production sites — the total production has continued to increase, substantially so in 2023 and 2024. China produced over 50% of global commercial shipbuilding in 2024, well beyond Japan and South Korea. And at its major shipbuilding hubs, especially in Shanghai, Guangzhou, and Dalian, commercial vessels are pumped out at rapid rates. Similarly, CSSC and CSIC have thrived on foreign ship orders. Data reviewed by CSIS has shown that foreign firms have purchased hundreds of hulls from China's biggest yards, resulting in billions in revenue. Many of these yards are co-production for military shipbuilding, too. CSSC in particular has been a successful case of what Beijing has called its "military-civil fusion" strategy, which removes the barriers between its commercial and defense sectors, allowing one to fuel the other. China's dual-use approach has allowed its shipbuilding industry to quickly produce naval vessels using the same equipment and personnel it uses for commercial ones, which has resulted in a naval force buildup that has received increased attention from the US and its allies and partners. The Chinese People's Liberation Army's Navy is the largest in the world, the Pentagon has noted repeatedly in its more recent annual reports on China's military. China's navy maintains a battle force of over 370 ships and submarines. And because China can produce a wide range of ships, engines, weapons, and systems, it is "nearly self-sufficient for all shipbuilding needs," the most recent report said. Self-sufficiency is an essential capability in a serious conflict, when supply lines could face unexpected pressures. Challenges for the US and its allies and partners The finalization of this merger adds to long-standing concerns in the West about China's shipbuilding dominance and raises questions about what the US and its allies, specifically South Korea and Japan, can and will do to bolster their own industries. US President Donald Trump has made revitalizing American shipbuilding a top priority, and there's growing talk about having the US military and defense contractors work more closely with South Korean and Japanese companies. Rhetoric, however, has been somewhat out of sync with action. By combining CSSC and CSIC, China appears to be notably strengthening its domestic industry for continued dominance of global shipbuilding. In January 2025, China held around 62% of the global order book for merchant vessels through 2033, CSIS reports, with over 80% of orders for new container ships and 30% for LNG, or liquefied natural gas, carriers vital for global trade. The new CSSC will now have even more resources across its yards for building military vessels. The consolidation between CSSC and CSIC lends to further expansion of China's shipbuilding capabilities and capacity, especially as Beijing will have more centralized control that will make it easier to transfer technologies, personnel, and assets for building ships across divisions, Funaiole said. For Washington and its allies, the merger underscores how far ahead Beijing already is — and the difficulties in catching up. Read the original article on Business Insider Sign in to access your portfolio
Business Insider
a day ago
- Business
- Business Insider
A shipbuilding behemoth is rising in China. By scale, nothing else comes close.
A Chinese state-owned shipbuilding group was already the world's biggest. Now it's finishing up a merger with its main domestic rival, resulting in an absolute juggernaut of an industry force. China has been quantitatively dominating the global shipbuilding game, leaving the US and its allies playing catch-up. The merger only tightens Beijing's grip on the industry, handing China a critical advantage in generating commercial and naval power. Last week, trading in the shares of China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation (CSIC) was suspended as CSSC moves to absorb CSIC, which is ultimately being delisted. CSSC previously received approval from the Shanghai Stock Exchange to absorb its competitor in a substantial share-swap deal. It marked the latest step in a merger that's been in the works since 2019, a move that will create a new streamlined shipbuilding behemoth. Though the companies merged years ago, industrial overlap continues to be an issue, as is unresolved internal industry competition. The mega merger cuts duplicated costs and redundant functions for more efficient, more coordinated operations. Post merger, Chinese media reports, CSSC will control some $56 billion in assets while generating $18 billion in annual revenue. Some estimates are higher. CSSC is China's — and the world's — largest shipbuilding group. It built more commercial vessels by tonnage in 2024 than the entire US shipbuilding industry has built since the end of the World War II, according to a report on Chinese shipbuilding earlier this year from the Center for Strategic and International Studies, a Washington-based think tank. And CSIC was the country's second-largest. Both are state-owned, meaning their operations and developments are overseen by the government, and they were originally part of the same firm until split in 1999 under Chinese Communist Party reforms. The reunion between the two is expected to result in a bigger, more powerful CSSC. It signals China's push for a more consolidated approach to its commercial and military shipbuilding. "When it's all said and done, CSSC will be the largest listed shipbuilding company in the world by a considerable margin, in terms of both assets and revenue," Matthew Funaiole, a CSIS senior fellow with the China Power Project, told Business Insider. "And maybe more importantly, it will have the full backing of the Chinese state and its industrial policy might." That kind of state backing means global rivals face not just a company, but an arm of Beijing's industrial strategy. A massive shipbuilding empire CSSC alone is a commercial shipbuilding giant, boasting expansive shipyards, factories, and research institutes controlled by political and military leaders in Beijing. It includes 84 subsidiaries and employs over 200,000 people across shipbuilding, engineering, research and development, and other areas, CSIS said earlier this year. Comparatively, the entire US shipbuilding industry directly employs just over 100,000 people, per available data. When the companies first began the merger process, CSSC and CSIC oversaw, by some estimates, $120 billion in combined assets — almost four times as much as South Korean rival Hyundai Heavy Industries. The companies shared resources, including financing, technologies, and personnel. The merger itself is part of China's long-standing push to consolidate its shipbuilding, as the "central government is trying to reduce horizontal competition between companies within its domestic market in order to be better positioned to extend its dominance over global markets," Funaiole said. And while the number of active Chinese shipyards has decreased since peaking in 2009 at just over 300 — as of 2024, it was around 150 spread across a handful of major production sites — the total production has continued to increase, substantially so in 2023 and 2024. China produced over 50% of global commercial shipbuilding in 2024, well beyond Japan and South Korea. And at its major shipbuilding hubs, especially in Shanghai, Guangzhou, and Dalian, commercial vessels are pumped out at rapid rates. Similarly, CSSC and CSIC have thrived on foreign ship orders. Data reviewed by CSIS has shown that foreign firms have purchased hundreds of hulls from China's biggest yards, resulting in billions in revenue. Many of these yards are co-production for military shipbuilding, too. CSSC in particular has been a successful case of what Beijing has called its "military-civil fusion" strategy, which removes the barriers between its commercial and defense sectors, allowing one to fuel the other. China's dual-use approach has allowed its shipbuilding industry to quickly produce naval vessels using the same equipment and personnel it uses for commercial ones, which has resulted in a naval force buildup that has received increased attention from the US and its allies and partners. The Chinese People's Liberation Army's Navy is the largest in the world, the Pentagon has noted repeatedly in its more recent annual reports on China's military. China's navy maintains a battle force of over 370 ships and submarines. And because China can produce a wide range of ships, engines, weapons, and systems, it is "nearly self-sufficient for all shipbuilding needs," the most recent report said. Self-sufficiency is an essential capability in a serious conflict, when supply lines could face unexpected pressures. Challenges for the US and its allies and partners The finalization of this merger adds to long-standing concerns in the West about China's shipbuilding dominance and raises questions about what the US and its allies, specifically South Korea and Japan, can and will do to bolster their own industries. US President Donald Trump has made revitalizing American shipbuilding a top priority, and there's growing talk about having the US military and defense contractors work more closely with South Korean and Japanese companies. Rhetoric, however, has been somewhat out of sync with action. By combining CSSC and CSIC, China appears to be notably strengthening its domestic industry for continued dominance of global shipbuilding. In January 2025, China held around 62% of the global order book for merchant vessels through 2033, CSIS reports, with over 80% of orders for new container ships and 30% for LNG, or liquefied natural gas, carriers vital for global trade. The new CSSC will now have even more resources across its yards for building military vessels. The consolidation between CSSC and CSIC lends to further expansion of China's shipbuilding capabilities and capacity, especially as Beijing will have more centralized control that will make it easier to transfer technologies, personnel, and assets for building ships across divisions, Funaiole said. For Washington and its allies, the merger underscores how far ahead Beijing already is — and the difficulties in catching up.
Hindustan Times
12-08-2025
- Business
- Hindustan Times
China Creates World's No. 1 Shipbuilder, Driven by Rivalry With U.S.
A $16 billion merger of two state-controlled shipbuilders in China is set for completion this week, creating the world's biggest shipbuilder while the U.S. searches for a path back into the business. American shipbuilders are playing catch-up after decades of maritime-industry decline, though President Trump's ambitious plans to revive American shipbuilding have hit snags recently. In the shorter term, Trump's threat to impose higher fees on ships made in China is giving South Korean and Japanese rivals an opening to win back market share. The Chinese champion is called China State Shipbuilding, or CSSC. This week it is scheduled to absorb its merger partner, China Shipbuilding Industry, and take the sole listing on the Shanghai Stock Exchange after regulators recently approved the deal. The merged company hopes to use its bulk to cut costs and help it ride out industry turmoil brought on by Trump's moves. The two companies were originally one and split up in 1999, when the government wanted to promote competition. These days, Beijing is looking to consolidate state-led companies in sensitive industries, particularly those connected with the military. CSSC's main business is commercial, but it is also an important contractor for the Chinese navy. The company it is absorbing designed and built China's first homegrown aircraft carrier, the Shandong. The company said the merger will allow it to better fulfill the navy's need for advanced equipment. 'This is a key milestone in China's long-term push to dominate global shipbuilding,' said Matthew Funaiole, an analyst at the Center for Strategic and International Studies in Washington. Together, the companies accounted for almost 17% of the global market last year, based on new-orders data from Clarksons Research. The merged company's combined order book will total more than 530 vessels and 54 million deadweight tons, the most in the world, with an annual revenue of around $18 billion, based on the latest annual reports. 'It strengthens Beijing's ability to execute its military-civil fusion strategy,' Funaiole said. 'Commercial and naval production are increasingly integrated, sharing technology, talent and infrastructure.' Beijing set its sights on dominating the shipbuilding industry decades ago, and now Chinese shipbuilders make up more than half of the global market. China-built ships accounted for about 55% of global tonnage last year, compared with less than 0.05% for the U.S., data from the United Nations show. China possesses 232 times the shipbuilding capacity of the U.S., according to the U.S. Navy. But recent data suggest China is facing rougher times because the prospect of U.S. port fees on Chinese-made ships has prompted owners to look at non-Chinese shipyards. In addition, Trump's tariffs and countries' focus on domestic supply chains have raised the specter of less global trade overall, meaning fewer ships would be needed to carry goods. Singapore-listed Yangzijiang Shipbuilding, China's biggest private yard, received orders for 14 ships worth $540 million in the first half of 2025, compared with 126 vessels worth $14.6 billion for all of last year. Clarksons data show global new ship orders fell 48% year on year in the first half of 2025. Yangzijiang said the sector faces 'macroeconomic uncertainties and geopolitical tensions.' Meanwhile, smaller rivals in Japan are looking to reclaim market share after decades of being pushed into a corner by lower-cost Chinese and South Korean rivals. Imabari Shipbuilding President Yukito Higaki, who is also head of the Shipbuilders' Association of Japan, said in June that the country aimed to raise its market share to 20% by 2030 from around 9% currently. The association is 'uniting Japanese ship and vessel companies under an 'All Japan' strategy to counter China and South Korea,' he said. Japan commanded around half of all shipbuilding output in the 1990s. A proposal in June from Japan's ruling Liberal Democratic Party calls for extensive subsidies for local shipyards to protect national security, including a $6.7 billion public-private fund. 'If we fail to act now, Japan risks losing its shipbuilding industry entirely, as Europe and the United States did,' the party said. China won't give up easily, said Kenneth G. Huang, a professor at the National University of Singapore who studies Chinese state-owned enterprises. 'Shipbuilding is a core capability that China wants to build,' he said, 'and the rivalry with the U.S. is going to push them to upgrade faster.' Write to Clarence Leong at and Costas Paris at
Yahoo
20-03-2025
- Business
- Yahoo
How foreign buyers are inadvertently feeding China's shipbuilding juggernaut and fueling its naval rise
China's shipbuilding industry is massive, pumping out commercial and military vessels. The blur between commercial and military shipbuilding has given China an edge in the industry. New research notes that foreign buyers are fueling China's shipbuilding prowess. The Chinese shipbuilding industry eclipses the rest of the world by capacity. The juggernaut boasts a dominant commercial sector and substantial growth in its navy. A new research paper from the Center for Strategic and International Studies think tank shows that foreign buyers are inadvertently fueling China's naval rise. The authors, Matthew Funaiole, Brian Hart, and Aidan Powers-Riggs, found that "a disproportionate share of China's commercial shipbuilding occurs at shipyards that are closely intertwined with the country's sprawling defense industrial base." Due to the close ties between China's commercial shipbuilding, which is largely supported by foreign buyers, and China's military shipbuilding, "foreign firms have funneled billions of dollars of revenue into entities that are central to China's naval modernization," they wrote. In the new CSIS report, China's shipbuilding is broken into four tiers, with higher ones having closer ties to military building. While Tier 1 and 2 yards represent just 15% of active shipyards in China, they produce 40% of its commercial output by tonnage. And over 75% of the production at these yards goes to foreign buyers outside of China or Hong Kong. Additionally, the authors explained, "foreign firms have also provided China's defense contractors with key dual-use shipbuilding technology through joint ventures, licensing agreements, and direct purchases" that have helped China overcome technological obstacles as it expands its capacity. Even when military and commercial production aren't linked, China's overall shipbuilding capabilities, techniques, personnel, and infrastructure give it an edge. The report also said that China's industrial policies, too, are causing issues for the US and its allies. Japan and South Korea are losing market share, and China's expansion into the high-value markets like cruise ships is hurting European shipbuilders. And that comes, the CSIS report notes, as "China's key naval shipbuilders continue to benefit from access to financial markets in the United States and its allies." China's industry has over 230 times the capacity of the US, per Office of Naval Intelligence estimates, representing over 50% of the total global shipbuilding capacity. South Korea and Japan are second and third, respectively, to China. US officials and analysts have pointed to these Pacific allies as examples of what's possible in shipyard modernization and effectiveness. Some of the biggest shipbuilding capacity in China comes from yards operated by the China State Shipbuilding Corporation and its subsidiaries. The CSIS researchers note that "the firm built more commercial vessels by tonnage in 2024 than the entire US shipbuilding industry has built since the end of World War II." China's vast industry, many shipyards, and investments have allowed it to grow a regional navy into a formidable force. The People's Liberation Army's Navy is the largest in the world, with a battle force of over 370 ships and submarines, per the Pentagon's report on China's military released last December. That includes more than 140 major surface combatants. The PLAN is on track to increase that number to about 425 by the end of the decade. US shipbuilding, on the other hand, has atrophied, making revitalizing the industry an uphill battle. The US builds top warships, from modern, technologically advanced carriers to stealthy subs, but they're often delivered late and over budget. Getting the industry back on its feet is a priority, but it won't happen overnight. And there's a lot of ground to cover to compete with China's shipyards. These numbers have raised alarms in the US Navy and among leadership in DC, including in the Trump administration. There have been calls for strengthening the US shipbuilding industry and getting to the root of major delays and cost overruns of big warship programs and discussions on how to solve longer-term issues related to a smaller workforce and hollowed industrial base. In a China context, there are concerns that the US can't build the naval force it needs for a war and that it will not be able to sufficiently repair or replace damaged and destroyed vessels as it could during the Second World War. The CSIS findings highlight the continued growth in China's capacity and the impact that it has on the US and its allies. The report offers a few policy recommendations, including severing US financial and business ties with CSSC, leveraging diplomacy to encourage other countries to limit their ties, and making investments in US shipbuilding capacity. Key to the latter is a focus on the shipbuilders, particularly the workforce. Lawmakers, experts, and officials have said that the loss of skilled workers and the inability to recruit new workers due to a lack of sufficient investment in wages and career opportunities are central to this issue. The US Navy's plans to continue building and maintaining its fleet will come with a hefty price tag — $40 billion each year through 2054, according to the US Congressional Budget Office's assessment of the Navy's 2025 shipbuilding plan. But right now, the US Government Accountability Office has determined that "none of the seven shipbuilders that construct Navy battle force ships are currently positioned to meet the Navy's ship delivery goals." Read the original article on Business Insider
