Key Points and Summary – China’s rapid transformation into the world’s dominant shipbuilder is the result of two major state-led initiatives launched a decade ago: “Made in China 2025” and “Military-Civil Fusion.”
-These policies, backed by tens of billions in government subsidies, were designed to integrate the nation’s commercial and defense sectors.
Type 093B Submarine from China. Image Credit: Screengrab.
-By creating synergies and a comprehensive supply chain, China’s massive commercial shipbuilding industry directly fueled its naval expansion.
-This unique command-economy approach has allowed China to churn out warships at a scale no other nation can match, making Western military alliances more critical than ever.
How China Built the Largest Navy on the Planet
WARSAW, POLAND – The growth China’s shipbuilding sector has achieved is nothing short of an industrial miracle. It has been building in greater numbers than U.S. shipyards for years now, and, among other ship types, China is now churning out one aircraft carrier after another.
The question is how China was able to move so fast, all while rapidly modernizing its shipyards and supporting industries. The answer lies in the development of two major campaigns ordered a decade ago by Chinese President Xi Jinping: Made in China 2025, and the Military-Civil Fusion initiative.
These major policy drives have had far-reaching effects that are plainly felt today. Both were designed to augment China’s economic and military power and now sit at the top of the regime’s priorities.
The Made in China 2025 program was aimed at making China the world’s leading manufacturer in ten key industrial sectors by this year. At the same time, the Military-Civil Fusion initiative was designed to integrate innovations and create technology-based synergies between defense and civilian sectors.
One of the numerous areas of defense production that has benefitted from these two initiatives is shipbuilding—specifically the production of naval vessels for the People’s Liberation Army Navy (PLAN).
China Type 076 from Chinese Weibo Screenshot.
Industrial Priorities
For the shipyards that support the PLAN, the Made in China 2025 initiative was structured to develop five globally competitive companies. Together they were supposed to capture a 40 percent share of the maritime equipment market; a 50 percent market share in high-tech ship design and manufacturing equipment; and achieve an 80 percent parts localization rate for advanced naval vessels.
This same industrial campaign was supposed to create a comprehensive supply chain to support design, assembly, equipment, and service for ships and marine engineering tools. This would encourage Chinese shipyards to begin developing and building more sophisticated ship configurations.
New ships were to include not only new-age military-use vessels, but also liquefied natural gas carriers, green-fuel-powered ships, cruise liners, and roll-on/roll-off vessels. Made in China 2025, the architects point out, was conceived primarily as an economic growth campaign, but it has generated measurable military capabilities for shipbuilding and naval construction.
Military-Civil Fusion
The Military-Civil Fusion initiative was created to enhance the integration of China’s commercial and defense sectors. The cooperation it engendered has boosted the capabilities and technological sophistication of each sector.
The program’s intent was, of course, to make both sectors more technologically advanced and innovative. Along the lines of “a rising tide lifts all boats,” the increases in technological capacities would promote greater all-around economic growth, and would enhance military capabilities as a secondary, follow-on effect.
The policy was formally launched in 2015, but the concept of military-civil fusion is not new. There have been various formulations of the concept for decades, but it has proven challenging to execute.
One challenge is that almost all of China’s shipbuilding firms engage in major commercial production, generating billions of dollars in revenue from foreign orders.
By the time of the Made in China 2025 announcement, China had already established itself as a shipbuilding superpower. Already In 2010, Beijing was the world’s largest shipbuilder; the government established an industrial policy designating the industry as a priority some years before.
Type 076 China Amphibious Assault Ship. Image Credit: Chinese Social Media.
But these impressive gains were not achieved without serious levels of government spending. The shipbuilding sector had received at least $90 billion in subsidies by 2013—mostly in subsidies that encouraged companies to enter into the shipbuilding industry.
The results were not long in coming. Shipbuilding began increasing by leaps and bounds, and by 2015, China received 27.6 percent of global new ship orders.
China’s example of how to build industrial momentum and cooperation between commercial and military sectors therefore demonstrates how government support can generate incredible results in shipbuilding growth.
But the initiatives also show how costly these campaigns can be. Most other nations will never have the billions of dollars to lavish on their shipbuilding industries that Beijing is able to mobilize.
Focused, strategic policies and investments can maintain and grow the most efficient and innovative shipyards. But for this to happen at such great scale is only possible in a command economy like China’s.
No other nation could implement such a set of programs. Beijing’s method of building an outsized navy, therefore, is a unique one.
This means that an alliance of nations dedicated to providing a combined naval presence equal to China’s is becoming more of an imperative. The U.S., UK, Australian, Japanese, and South Korean navies will have to become more effective in shared operations and in determining how to best employ each nation’s naval forces to maximize competitive advantages.
About the Author: Reuben F. Johnson
Reuben F. Johnson has thirty-six years of experience analyzing and reporting on foreign weapons systems, defense technologies, and international arms export policy. Johnson is the Director of the Asia Research Centre at the Casimir Pulaski Foundation. He is also a survivor of the Russian invasion of Ukraine in February 2022. He worked for years in the American defense industry as a foreign technology analyst and later as a consultant for the U.S. Department of Defense, the Departments of the Navy and Air Force, and the governments of the United Kingdom and Australia. In 2022-2023, he won two awards in a row for his defense reporting. He holds a bachelor’s degree from DePauw University and a master’s degree from Miami University in Ohio, specializing in Soviet and Russian studies. He lives in Warsaw.
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