HOUSE COMMITTEE ON FOREIGN AFFAIRS
SUBCOMMITTEE ON EAST ASIA & THE PACIFIC
For questions on the note below, please contact the Delta Strategy Group team.
On July 22, the House Committee on Foreign Affairs, Subcommittee on East Asia and the Pacific held a hearing entitled “Charting a New Course: Countering China’s Dominance in Global Shipbuilding.” The witnesses in the hearing were:
- Dr. Matthew Funaiole, Vice President and Dracopoulos Chair in Innovation, Center for Strategic and International Studies
- Brent Sadler, Senior Research Fellow for Naval Warfare and Advanced Technology, Allison Center for National Security, The Heritage Foundation
- J. James Kim, Program Director, Korea Program, Henry L. Stimson Center
Below are several key takeaways from the hearing prepared by Delta Strategy Group.
KEY TAKEAWAYS
China’s Commercial Shipbuilding Dominance
- Members and witnesses broadly agreed that China’s state-supported expansion has created a major commercial and supply-chain vulnerability. Chair Kim (R-CA) stated China controls more than half of global shipbuilding capacity while U.S. output accounts for less than one-tenth of one percent. Rep. Sherman (D-CA) cited estimates that China’s shipbuilding capacity is currently 232 times that of the U.S.
- Dr. Funaiole attributed China’s advantage to decades of coordinated industrial policy, including subsidized financing, discounted materials and energy inputs, and support for state-owned builders. He argued the U.S. should not match China “hull for hull” but expand competitive capacity outside China.
- Mr. Kim warned continued consolidation could leave buyers few alternatives and let Beijing dictate pricing, delivery, and terms, noting maritime dependence is especially consequential for agriculture and energy commodities that rely heavily on commercial shipping.
- Witnesses emphasized that many Chinese shipyards build commercial and military vessels within the same industrial ecosystem, using shared infrastructure, labor, suppliers, and technology. They warned that foreign commercial orders may indirectly support China’s broader maritime industrial base and make it difficult for buyers to assess the risks associated with particular shipyards.
U.S. Commercial Capacity & Supply Chains
- Witnesses identified workforce shortages, weak domestic supplier networks, limited yard capacity, and insufficient commercial demand as the principal obstacles to rebuilding the industry. Ranking Member Bera (D-CA) emphasized aging shipyards and lost expertise as a contributing factor, while Chair Kim highlighted her FLEETS Now Act as a workforce measure.
- Rep. Amo (D-RI) pressed on workforce development and domestic supply-chain security. Mr. Kim recommended standardizing vessel designs, technical specifications, and key components across the U.S., South Korea, and Japan so allied yards can share suppliers and production, creating a more resilient alternative to Chinese-controlled supply chains.
- Rep. Mackenzie (R-PA) noted South Korea’s investment in the Hanwha Philly Shipyard has not yet produced sufficient output. All witnesses stressed that long-term policy consistency, measurable milestones, stronger domestic demand, and improved investor returns are needed to attract sustained private capital.
Allied Shipbuilding Cooperation
- Members and witnesses identified South Korea and Japan as the most important near-term partners, citing their ability to build complex vessels including LNG carriers and dual-fuel ships at greater scale and efficiency than existing U.S. yards.
- Rep. Barr (R-KY) asked why South Korea and Japan are especially valuable partners. Mr. Kim highlighted their experience with large, complex commercial vessels, while Dr. Funaiole noted South Korea retains a substantial share of the market for more advanced vessels despite China’s broader dominance.
- Mr. Kim described a “Bridge Strategy” under which initial vessels or components are produced in allied yards while corresponding investment, workforce development, and domestic capacity are established at home.
Trade, Financing, & Market Incentives
- Members discussed tariffs, sanctions, and Section 301 measures alongside financial incentives. Witnesses supported trade enforcement but warned punitive measures will have limited effect unless buyers are offered sufficient capacity and financing outside China.
- Dr. Funaiole recommended tax incentives, low-cost financing, and targeted support for advanced components and specialized vessels. Mr. Kim called for shipyard construction credits, investment tax credits, and expanded Export-Import Bank and U.S. International Development Finance Corporation financing.
- Rep. Radewagen (R-AS) asked what incentives could move global shipping companies away from Chinese builders. Dr. Funaiole responded that government incentives help but the central requirement is reliable, cost-competitive capacity outside China.
Energy & Commodity Shipping
- Rep. Moylan (R-GU) raised the implications of weak U.S. shipping capacity for energy transportation. Dr. Funaiole argued the U.S. lacks leverage in shipbuilding but remains a major energy producer, making the question of which trusted countries and fleets transport U.S. energy exports a strategic one.
- Mr. Kim warned concentrated shipbuilding and repair capacity could expose agricultural, energy, and bulk commodity exporters and importers to higher costs, longer delivery times, and disruption if access to Chinese yards or components becomes restricted.
- Members discussed the Jones Act and territorial shipping requirements without clear consensus on major reforms.