Chinese shipyards that are central to Beijing’s drive to modernize its navy are also seeing billions of dollars worth of orders and technology transfers from commercial shipping companies in deals that it says researchers, could inadvertently help modernization plans for the Chinese military.
The Center for Strategic and International Studies (CSIS) says evidence suggests that profits from foreign orders are likely to help “reduce modernization costs for China’s navy”.
China is the world’s largest builder of large ocean-going ships and its main shipyard – China State Shipbuilding Corporation (CSSC) – controls 21.5% of the global commercial shipbuilding market.
It also produces warships for the Chinese navy, and CSIS says that’s a risk, especially given the lack of transparency about shipbuilding companies and their work with the military.
“The CSSC is a central part of Beijing’s military-civilian fusion (MCF) strategy, which aims to modernize the People’s Liberation Army (PLA) and upgrade China’s military science and technology industries. while simultaneously strengthening the instruments of national power at all levels,” he added. tank said in an article published last month.
China has become the world leader in shipbuilding since merging its commercial and military yards to make them more competitive against rivals in Japan and South Korea. It now produces more merchant ships by tonnage than any other country, according to CSIS.
“Much of the entanglement we’re currently struggling with in terms of the security perspective is largely due to where we’ve gotten to because of market forces,” said Matthew Funaiole, senior researcher at the CSIS’s China Power Project and one of the authors of the report. , told Al Jazeera. “We are now at the point where we have to figure out how to structure this relationship.”
CSSC is among a number of companies subject to US sanctions over military ties, but CSIS said satellite images showed its four shipyard units continued to build ships for shipping lines in outside of China and Hong Kong even as they worked on naval vessels.
Between 2019 and 2021, the four shipyards monitored by the CSSC received orders for at least 211 commercial vessels, according to CSIS data, with foreign companies placing 64% of the orders.
New approach needed
Among its customers, according to the think tank, is Taiwan’s Evergreen Marine, one of the world’s largest shipping companies.
CSIS says almost all of Evergreen’s orders are for shipyards known to produce surface combatants for the Chinese Navy.
Commercial satellite images of Jiangnan, a CSSC yard at the mouth of the Yangtze near Shanghai, in February showed at least three ships for Evergreen under construction near the berth where China’s third aircraft carrier, the Type 003, is under construction, CSIS said.
Satellite images from January 2021 showed a separate Evergreen ship moored alongside two Type 055 cruisers and a Type 052D destroyer.
Evergreen told Al Jazeera that all of its shipbuilding projects are subject to competitive international bidding, with companies from Taiwan, South Korea and Japan also winning contracts for its commercial fleet.
He said he had received orders so far for 35 container ships with a capacity of around 240,000 TEUs from Chinese builders, but did not specify the yards where they were being built. He noted that his orders with Korean companies were much higher – 58 container ships with a combined capacity of more than 730,000 TEUs.
“The Chinese contractor currently building some of our ships is China State Shipbuilding Corporation’s commercial shipbuilding department, which is completely different and separate from its military department,” Evergreen said in a statement responding to Al Jazeera. “It is common practice for international shipyards in many countries to have both commercial and military departments.”
Foreign shipping lines including French shipping giant CMA CGM, Mediterranean Shipping Company of Switzerland, the world’s largest container shipping line by cargo capacity, Japan’s Kawasaki Kisen Kaisha (K-Line) and Mitsui OSK Lines of Japan also ordered dozens of ships. Chinese shipyards over the past five years, CSIS said.
The French naval engineering company Gaztransport & Technigaz SA (GTT), which has close ties with CMA CGM, has also signed agreements to make its technology available to Chinese shipbuilders.
Funaiole said while this is not about ending business relations with Chinese shipyards, companies need to be more aware of potential security risks with an industry that is a crucial part of China’s military modernization strategy. Beijing.
“We are not going to stop doing business with China, but we have to find a new mechanism for this type of exchange and where are the limits,” he said.