Foreign orders boost China shipbuilding firm linked to military | Shipping News

China’s shipyards, the heart of Beijing’s naval modernization efforts, are also seeing billions of dollars worth of orders and technology transfers from commercial shipping companies. trade in transactions that researchers say could inadvertently help China’s military modernization plans.

The Center for Strategic and International Studies (CSIS) says evidence shows that profits from foreign orders can help “reduce China’s naval upgrade costs”.

China is the largest shipbuilder in the world, and its leading shipyard – the China State Shipbuilding Corporation (CSSC) – controls 21.5 percent of the global commercial shipbuilding market.

It also manufactures warships for the Chinese navy, and CSIS says that is a risk, especially given the lack of transparency about the shipbuilders and their work with the military.

“CSSC is a core of Beijing’s military-civilian fusion (MCF) strategy, which aims to upgrade the People’s Liberation Army (PLA) and upgrade China’s military science and technology sectors. , and at the same time strengthen the tools of national power comprehensively”, thought. speaking tank in a paper published last month.

Satellite images of ships under construction in China
A satellite image obtained by the Center for Strategic and International Studies’ Transnational Threats Project shows an Evergreen hull under construction near three Chinese military ships [Courtesy of CSIS/Maxar 2022]

China has emerged as a world leader in shipbuilding since merging commercial and military yards to make them more competitive with rivals Japan and South Korea. According to CSIS, the country now produces more merchant ships than any other country.

Matthew Funaiole, senior fellow at CSIS’s China Electric Power Project and one of the report’s authors: “There are many problems we face today from a security standpoint. , told Al Jazeera. “Now we’re at the point where we need to figure out how to structure that relationship.”

CSSC is one of the companies subject to US sanctions over military links, but CSIS says satellite images show its four shipbuilders are continuing to build ships for shipping lines outside China and Hong Kong even as they work on ships for the navy. army.

Between 2019 and 2021, four CSSC-controlled shipyards received orders for at least 211 commercial vessels, according to CSIS data, with foreign companies placing 64% of the orders.

A new approach is needed

According to the research team, among its customers is Taiwan’s Evergreen Marine, one of the world’s largest shipping companies.

Nearly all of Evergreen’s orders go to shipyards known to manufacture surface warships for the Chinese navy, CSIS said.

Commercial satellite imagery of Jiangnan, a CSSC yard located at the mouth of the Yangtze River near Shanghai, in February showed at least three Evergreen ships under construction near the docks where China’s third aircraft carrier, the Type 003, is being closed, CSIS said.

Satellite image from January 2021, showing a separate Evergreen ship docked with two Type 055 cruisers and a Type 052D destroyer.

Evergreen told Al Jazeera that all of its shipbuilding projects are subject to competitive international tenders with companies in Taiwan, South Korea and Japan also securing contracts for their commercial fleets.

Satellite images of ships under construction in China
A satellite image obtained by the Center for Strategic and International Studies’ Transnational Threats Project shows the Type 003 aircraft carrier being built in Jiangnan near two Evergreens [Courtesy of CSIS/Maxar 2022]

It said it had orders for 35 container ships with a capacity of about 240,000 TEU so far from Chinese manufacturers, but did not elaborate on the terminals they are being built for. It notes that their orders with Korean companies are 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 the commercial shipbuilding division of the China State Shipbuilding Corporation, which is completely different and separate from its military division.” Evergreen said in a statement responding to Al Jazeera. “It is a common practice that international shipyards in many countries have both commercial and military divisions.”

Foreign shipping companies include French shipping giant CMA CGM, Swiss Mediterranean Shipping, biggest The world’s leading container shipping company in terms of freight capacity, Kawasaki Kisen Kaisha (K-Line) and Mitsui OSK Lines of Japan have also ordered dozens of ships from Chinese yards in the past five years, CSIS said. said.

French naval engineering company Gaztransport & Technigaz SA (GTT), which has close ties to CMA CGM, also signed agree to provide its technology to Chinese shipbuilders.

Funaiole said that while the issue is not ending commercial relationships with Chinese yards, companies need to be more mindful of the potential security risks to an industry that plays a role. important role in Beijing’s military modernization strategy.

“We are not going to stop doing business with China, but we have to find a new mechanism for this kind of exchange and where the boundaries are,” he said.

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