It’s Not Enough

In an op-ed in the Wall Street Journal Mike Waltz and Mark Kelly write about the urgent necessity of rebuilding the U. S. maritime sector:

China uses the world’s oceans to pursue global supremacy, employing coercion and economic intimidation against weaker nations. In the South China Sea it has seized more than a dozen islands in waters claimed by its neighbors. China is using the islands as military outposts, which serve to choke off the region’s economic and natural-resources lifelines. Beijing’s games of chicken with foreign ships contravene international law, risk dangerous escalation, and deny freedom of navigation to American allies and partners.

Yet the Communist Party’s reach and intentions extend beyond regional waters. China has become the world’s top shipbuilder. It controls one of the world’s largest shipping companies and boasts the largest navy. It has built these capabilities with the help of massive state subsidies.

By flouting international standards of fair market behavior, China has secured nearly half the world’s shipbuilding market as well as control over port and shipyard infrastructure around the world.

In shipbuilding, according to a conservative analysis by the Center for Strategic and International Security, China offered $132 billion in subsidies to the shipbuilding and shipping industries between 2010 and 2018. These industries are buttressed by policies like debt forgiveness, low-interest bond issuance, equity infusions and barriers to foreign competition.

Let’s consider just one tiny aspect of China’s domination of U. S. shipping: ship-to-shore (STS) cranes. All U. S. ports taken together have a total of 250 STS cranes used to more containers from ships to the docks and vice versa. Of the 250 200 are from China, 80%. They’re all made by a single company, Zhenhua Port Machinery (ZPMC). Back at the beginning of the year there was a kerfuffle about the Chinese-made cranes being equipped with the ability to make or receive calls without the calls being made or detected by the users of these cranes. Security concerns were raised. The Biden Administration announced a number of security measures including a 25% tariff on Chinese cranes and the intention to replace all 200 of the Chinese-made cranes presently installed with U. S.-made cranes.

These cranes are expensive—around $10 million each. The amounts being discussed to replace them ($20 billion) are about right but that’s not all. We import food (15%), oil (43%), building materials (40%), and many, many other consumables, much of them from or through Canada and Mexico. Canada has a dozen ports with these STS cranes and Mexico at least a half dozen. To secure shipping we’ll need to subsidize Canada’s and Mexico’s replacement of cranes, too—they’re unlikely to do so otherwise.

And there’s a sort of ripple effect in the supply chain for these cranes—steel, electronics, copper, etc. My back-of-the-envelope calculation suggests that we’d need to increase our steel production by about 2% (it’s been declining for decades). Then there’s iron, coal, etc. to make the steel. And that’s just for cranes. Not ships which the main subject of the linked article.

So simply building more STS cranes is not enough. It will take a major effort.

And that brings me to my real point. We only have a handful of alternatives. We can do what we have been doing for forty years which is wish for the best. We could make China into a vassal of the United States. That’s what you’re seeking when you demand that China abandon its own interests in favor of yours. I don’t believe we’re prepared for what that would require.

The United States could become a vassal of China. That would be hard on the U. S. but even harder on the countries of the Western Pacific. Or we could re-industrialize, regardless of cost or run-on effects.

You pays your money and you makes your choice.