How America can rebuild its fleet to counter China’s maritime dominance

China last month mounted its largest show of force around Taiwan in almost 30 years, with more than 90 naval or paramilitary vessels and dozens of aircraft operating in the air and waters around Taiwan’s ports and Japan’s southernmost islands. America has a shrinking set of options to respond if a demonstration like this turns into an actual blockade of Taiwan or a more aggressive form of conflict.

China’s shipbuilding capacity is more than 200 times larger than that of the U.S., enabling it to deliver 689 large commercial ships in 2023 and to commission 30 ships for its navy. American shipyards that year delivered zero large commercial vessels and nine ships for the U.S. Navy. More Chinese national flag cargo ships operate globally than the national flag fleets of America and U.S. allies combined. Chinese companies own marine terminals in about 100 ports outside of China (including at every maritime chokepoint), and in 23 of the top 25 container shipping ports. They also dominate maritime information platforms, equipment providers and other key parts of the industry.

China’s control of commercial shipping and shipbuilding gives it a potentially decisive military advantage, enabling the Chinese Navy to build up its fleet at a fraction of the costs incurred by the U.S. and its allies. If competition ever turns into conflict, China could use its maritime dominance to choke the American economy and scale up its fleets at an extraordinary pace.

For its part, the Pentagon lacks the basic maritime logistics capacity to resupply American troops overseas for more than a very short conflict. It relies on a shipbuilding industrial base that evolved primarily to produce the most exquisite warships in the world, but that has far too little capacity to scale up fast production of new classes of smaller autonomous vessels. Deindustrialization has left the Pentagon without nearly enough of an American (or allied) commercial maritime sector on which to rely.

America urgently needs a dramatic shift in policy. A bipartisan bill introduced at the end of the last Congress could help provide that turnaround. The Ships for America Act — introduced by Rep. Trent Kelly (R-Miss.), Rep. John Garamendi (D-Calif.), Sen. Mark Kelly (D-Ariz.) and Sen. Todd Young (R-Ind.) — would triple the number of American cargo ships trading internationally and phase in construction of those ships at American shipyards.

The program would cover basic military sealift needs, jump-start America’s shipbuilding industry and reduce the risks in international supply chains. The bill would also shore up the industry’s foundations, including building a more robust American maritime workforce, eliminating unnecessary regulations and providing predictable funding and effective government oversight.

The reasons behind China’s massive advantages in the commercial maritime industry are no mystery. Entry-level mariners on the Chinese-built, foreign-registered ships that dominate global trade earn $8,000 per year for 11 months at sea, a small fraction of what an American mariner might reasonably expect. Shipbuilders in China enjoy labor and material costs that are half as much as those in U.S. and EU shipyards.

While Western governments allowed their shipping and shipbuilding industries to atrophy, official Chinese government policy moved in the opposite direction, showering its maritime industry with billions of dollars in annual support on top of structural cost advantages. And they did so during one of the largest peacetime expansions of global shipping capacity in modern history, conferring enormous economies of scale and scope on Chinese maritime businesses.

If America is to mitigate its maritime risks and turn around its shipping and shipbuilding industries, the question is not whether to deploy government support but how to structure that support to be as effective and cost-efficient as possible. The demand-driven approach in the Ships for America Act meets that test.

Rather than allocate tens of billions of dollars to try and outbuild China, the bill would expand the U.S. fleet as quickly as possible by reflagging existing allied-built ships. It would also quickly phase into the program the construction of advanced technology American-built ships. Those ships would operate in international commercial markets selected to optimize their value to national and economic security. The ships and mariners would be under contract to support military sealift and other U.S. security interests.

Taxpayer support would be disciplined through competitive procurements and only cover the extra costs of “Americanizing” ships, i.e., building them in the U.S. and crewing them with American mariners. Costs would decline as shipbuilders move up the learning curve and to the extent that shipping customers are incentivized to use American ships.

Growing the U.S. flag fleet would add thousands of experienced American mariners, while building these ships in American shipyards would provide enough work for hundreds of American businesses across the country, from naval architecture and design to steel and equipment production, and throughout the supply chain.

The Ships for America Act provides a blueprint for smart, 21st-century reindustrialization policy to counter the geopolitical threats of today. Passing it should be one of the new Congress’s top priorities.  

Bryan Clark and Michael Roberts are senior fellows with the Hudson Institute and co-authors of the recent report “Shoring Up the Foundation: Affordable Approaches to Improve U.S. and Allied Shipbuilding and Ship Repair.”