The Chinese military shipbuilding industry’s future hinges on multiple factors. Costs of key inputs (materials, labor, electronics, weapons) affect Chinese planning and competitiveness. One of the most important questions in this regard is what will happen to wages of China’s most skilled marine engineers and naval architects in a poor market. They may be relatively sticky because shipyards do not want to lose the human capital they have built, but this remains to be seen in practice. A Chinese ability to engage in disruptive innovation in electronics, sensor suites and data linkages and integration would be a major breakthrough. Surface combatants, which already enjoy modest numerical emphasis, will be defined by their degree of sophistication. Auxiliary vessels, still small in number and not needing the highest sophistication, will be defined by their degree of emphasis. Vessels with nuclear propulsion, currently small in numbers and performance, will be defined by degrees of both capability (acoustics) and emphasis. Aircraft carriers, even fewer in numbers and more unproven in performance, will be defined by degrees of capability (catapults) and emphasis. Finally, as China’s navy ranges ever-further afield, establishment of overseas repair facilities could greatly enhance its power-projection capacity.
While China’s shipbuilding industry still grapples with some specific challenges, its overall capacity to build large numbers of modern surface warships and conventional submarines is increasingly potent. China’s economic rise is an important overall driver. The U.S. National Intelligence Council even predicts that China could have the world’s largest economy by 2022 (in purchasing-power parity) or 2030 (in market exchange rates).
While China’s current economic slowdown may move the country onto a slower long-term growth track, its naval-shipbuilding sector already has a sufficiently strong base to allow three projections. First, by 2015, China will likely be second globally in numbers of large warships built and commissioned since the Cold War’s end. Second, by 2020, barring a U.S. naval renaissance, it is possible that China will become the world’s leading military shipbuilder in terms of numbers of submarines, surface combatants and other naval surface vessels produced per year. Third, with respect to overall shipbuilding, China will likely reach 2013 Russian technical-proficiency levels by 2020 and may even reach 2013 U.S. technical levels by 2030. As China’s naval shipyards transition from being hull builders to truly comprehensive shipbuilders capable of indigenously producing all necessary ship subsystems including propulsion and electronics, it will likely become a serious export competitor in the corvette, frigate and diesel-submarine markets. If China carries through with this ongoing transformation, it will have major geostrategic implications. Each of the global powers since 1400—Portugal, Spain, the Netherlands, the United Kingdom and the United States—have all been maritime powers whose naval prowess was backed by a powerful and capable shipbuilding industry.
Andrew S. Erickson is an associate professor at the Naval War College and an Associate in Research at Harvard’s Fairbank Center. He runs www.andrewerickson.com and co-manages www.ChinaSignPost.com. Gabe Collins is a J.D. candidate at the University of Michigan Law School and co-manages the ChinaSignPost.com research portal.