According to Chinese-language media Da Ji Yuan on April 13, billions of dollars in foreign shipbuilding contracts could be used to fund Beijing’s new warships.

The Center for Strategic and International Studies(CSIS) stated that four shipyards operated by China State Shipbuilding Corporation (CSSC) subsidiaries — Dalian, Jiangnan, Hudong-Zhonghua, and Huangpu Wenchong had received billions of dollars in foreign investment in recent years. Large companies outside China and Hong Kong have entrusted these shipyards such as Taiwan.

According to CSIS, China’s opaque business ecosystem offers limited transparency into the flow of capital within its shipbuilding industry, but available evidence indicates that profits from foreign orders likely lower the cost of upgrading China’s navy.

CSSC is a major builder of Chinese naval ships and develops weapons and other defense equipment for the Chinese authorities. This corporation alone accounts for 21.5% of the world’s shipbuilding market and controls more than a hundred subsidiaries.

Although the U.S. has blacklisted CSSC for investment in 2020, as the data shows, this has had little impact on international demand.

In 2020, China accounted for more than 40% of all merchant ships built globally. The second place is South Korea, accounting for 31.5%, followed by Japan at 22.2%.

CSIS advised enterprises that policymakers in Washington should explore opportunities to incentivize foreign companies away from China and partner with South Korean and Japanese alternatives.

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