The Hindu: Published on 14th Jan 2025:
Why in News?
The U.S. administration has concluded a probe revealing that China uses unfair trade practices to dominate the global shipbuilding, maritime, and logistics sectors.
The findings could lead to tariffs on Chinese-built vessels and mark a continuation of the U.S.-China trade tensions.
Key Issues Identified in the Probe:
Financial Support: Extensive government subsidies to Chinese shipbuilders, aiding their global dominance.
Market Barriers: Restrictions for foreign firms operating in China.
Forced Technology Transfers: Coercion and intellectual property theft to gain technological advantage.
Labour Cost Manipulation: Artificial suppression of labor costs in China’s shipbuilding and maritime sectors.
Impact on Global Shipbuilding Industry:
China's Rise: From 5% of the global shipbuilding market share in 2000 to over 50% in 2023.
U.S. Decline: U.S. share has fallen below 1%, with South Korea and Japan holding smaller shares than China.
Market Dynamics: The dominance of Chinese shipbuilding could lead to an uneven playing field in the global maritime industry.
Implications for U.S. Policy:
Tariffs on Chinese-built vessels: Similar to Trump-era trade policies under Section 301 of the Trade Act of 1974.
Long-term Challenges: Experts estimate rebuilding the U.S. shipbuilding industry could take decades and require substantial investment.
Allied Support: U.S. may collaborate with allies to meet naval and industrial demands.
Broader Economic Context:
Bipartisan Agreement: Both Democrats and Republicans agree on the need to counter China’s industrial policies.
Continuation of Policies: Biden has maintained Trump-era tariffs and introduced export controls to reduce China’s dominance.
China’s Denial: China rejects accusations of unfair practices, claiming adherence to international trade norms.
Future Outlook:
Tariffs and Trade Restrictions: Likely escalation in trade actions against Chinese shipbuilding.
Industrial Revitalization: U.S. aims to revitalize its shipbuilding industry, potentially through subsidies, tariffs, and strategic partnerships.
Global Maritime Dynamics: Rising tensions may influence other shipbuilding nations, such as South Korea and Japan, to align with the U.S. against China's dominance.
Conclusion:
The findings of the U.S. probe highlight significant challenges posed by China’s dominance in shipbuilding and maritime sectors. While tariffs and policies can mitigate the immediate trade imbalances, rebuilding the U.S. shipbuilding industry will require long-term, bipartisan commitment, substantial investments, and international collaboration.
