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.

3 comments… add one
  • steve Link

    You are proposing a significant decrease in standards of living for Americans to achieve that goal. As I noted before we are actually having a boom in the construction of manufacturing facilities. A big part of that is the subsidies offered in the CHIPS(?) act. When we subsidize like China does we compete just fine. However, that comes at a cost. While I think many common Americans might be willing to accept those costs I dont see the business elites being quite so willing.


  • You are proposing a significant decrease in standards of living for Americans to achieve that goal.

    Nothing remotely like the decrease in standards of living if China decides to shut down foreign trade for us.

    So, which of the other alternatives do you favor? Hoping for the best? Going to war with China?

  • bob sykes Link

    Last year, China had 58% of world ship building. The US has 0.3%.

    Also, Chinese companies manage a great many ports all around the world. Their own ports are highly automated, at least one run by AI’s. I believe they operate the Panama Canal and at least one American west coast port. LA?

    Today, China’s manufacturing sector is at least 50% larger than the US’, and it might be twice as large. Moreover, it is the most modern manufacturing sector and the most highly automated in the world. China has something like two-thirds of all the industrial robots in the world, and it annually buys a great majority of the new ones made. Most of their robots run on AI-optimized controls. China has 80% of all the 5G base stations in the world.

    The fact is the US is an industrial backwater, a generation or more behind China, and still losing ground. We are about to become a technological backwater, too. China has ten times as many engineers and scientists as we do, and they graduate 10 times as many as us each year. Some 30% of all the students enrolled in our graduate STEM programs are Chinese nationals.

    And don’t forget the Russians. They have as many engineers and scientists as we do, and annually graduate as many, and that on a population only 40% of our. Their manufacturing sector is almost as big as our, and it is entirely self-sufficient.

    The myth of American industrial might persists, but it is just that, a myth.

    It is not correct to say China subsidizes ship manufacturing or any other business. The Chinese government is involved in many businesses, the involvement ranging from regulation to ownership. To varying degress, China’s whole economy is managed by the CPC.

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