By. Max Mooradian
DOI: 10.57912/28426505
U.S. Shipbuilding Shortfalls
As the geopolitical landscape evolves, two critical challenges persist: the potential for a Chinese invasion of Taiwan, and the United States' inability to match China's shipbuilding capabilities. According to the Congressional Research Service, by 2030, projections indicate that China will possess a fleet of 435 ships, while the U.S. fleet is expected to decrease to approximately 290 ships. This disparity presents a significant national security risk to Taiwan and U.S. regional allies, especially considering that the Navy reported to Congress in 2023 that the battle force goal requires 381 ships to address the Navy’s future warfighting demands.
The threat of a Chinese invasion of Taiwan looms increasingly imminent, as two former U.S. Indo-Pacific Commanders, Admiral Philip Davidson and Admiral John Aquilino, have cautioned that China could be prepared for such an attack as early as 2027. The Department of Defense has echoed similar concerns, suggesting China would be prepared for an invasion by 2030. Addressing the reasons behind the United States’ lag in shipbuilding is imperative to implementing measures to reverse this trend before it is too late.
Several factors contribute to the current challenges. First, China's domestic shipbuilding industry, bolstered by substantial government subsidies and close state-industry collaboration, significantly outpaces its U.S. counterpart. Unforeseen delays and the accelerated decommissioning of U.S. naval vessels further exacerbate the shipbuilding shortfall.
To address these pressing issues, Congress must develop targeted incentives and bipartisan policy initiatives to revitalize the U.S. shipbuilding industry. Furthermore, the Trump administration should prioritize reauthorizing the Defense Production Act, which is set to expire in 2025. By leveraging this act in collaboration with Congress, the United States can begin to bridge the shipbuilding gap and ensure U.S. Naval capabilities remain robust in the face of the looming threat from the People’s Liberation Army Navy.
China vs. U.S. Shipbuilding Industries
It is essential to examine each nation’s distinct approaches to leveraging their industrial shipbuilding bases to underscore their stark differences. In China, shipbuilding yards commonly integrate civilian and military personnel within the same facilities, exemplifying the country's civil-military fusion strategy. By contrast, the United States operates numerous smaller, dispersed shipyards entirely separate from military operations, resulting in a fragmented and less coordinated system.
China’s shipbuilding industry also benefits significantly from substantial government subsidies and other forms of state support. From 2010 to 2018, China’s shipbuilding sector received $127 billion in state financing and $5 billion in direct subsidies. Additionally, the Chinese Communist Party (CCP) employs indirect measures such as state fundraising, price consolidation, and other financial mechanisms to further enhance the industry’s capabilities.
In comparison, the United States has not subsidized its shipbuilding industry in recent decades. This lack of support has contributed to a steep decline in the U.S. shipbuilding workforce, which has shrunk from 120,000 workers to 72,000. Similarly, the number of operational shipyards has decreased from 110 to 60, with only nine facilities capable of constructing large commercial and naval ships.
In recent years, delays have emerged as a significant concern for the United States due to the military's reliance on private industry for shipbuilding. These delays can be attributed to several factors, including companies entering contracts they know they cannot fulfill, the absence of robust incentive or accountability structures, and a shortage of skilled workers to meet production demands.
Another critical issue is the Navy's current trend of losing ships faster than it can produce them.
According to the FY2025 report, approximately six new vessels are expected to be commissioned. In comparison, 19 ships are slated for retirement, 10 of which have not yet reached the end of their expected service life, bringing the current total to 287 ships. This imbalance further exacerbates the challenges faced by the U.S. Navy in maintaining fleet readiness and capability.
Strategic Proposals
Congress has a pivotal role in addressing these challenges. Lawmakers are well-positioned to understand the needs and concerns of shipbuilders and can draw inspiration from the successes of China's shipbuilding strategies. Legislation that mirrors these successful practices could offer a viable path forward. Taking the lessons of Chinese shipbuilding practices, Congress must introduce a bipartisan bill that provides subsidies to key shipbuilding companies, establishes contracts with financial penalties for delays and rewards for early completion, and fosters greater cooperation between civilian and military sectors to create a U.S. equivalent of China's civil-military fusion strategy. By taking these steps, Congress can help revitalize the U.S. shipbuilding industry and address these pressing challenges.
Since its introduction in 1950, the Defense of Production Act, modeled after the War Powers Act of WW2, has been utilized by numerous presidents to grant the President control over critical aspects of the domestic economy. More recently, it has been employed to direct private companies to prioritize federal government orders. For instance, in 2020 President Trump invoked the DPA during the COVID-19 pandemic, ordering General Motors to produce 3 million ventilators.
However, this Act requires congressional reauthorization in 2025, as it must be renewed every five years to remain in effect. Fortunately, this is unlikely to pose a challenge, as the DPA has consistently been reauthorized since its inception. The more pressing issue is determining how to most effectively utilize this authority. This can be achieved by directing shipyards to prioritize naval contracts; ensuring critical materials such as steel, electronics, and propulsion systems are allocated to naval construction, and accelerating timelines for the most strategically important projects.
The growing disparity between U.S. and Chinese shipbuilding capabilities represents a significant national security challenge that requires immediate and comprehensive action. China's integration of civilian and military shipbuilding, backed by extensive subsidies and state coordination, has enabled it to outpace the United States in fleet expansion and modernization. Meanwhile, the U.S. shipbuilding industry faces structural inefficiencies, workforce shortages, and insufficient government support, leaving the Navy unable to sustainably replenish its fleet.
Congress and the next administration must act decisively to address these issues. This includes implementing targeted subsidies for shipbuilders, fostering civil-military collaboration to mirror China’s successful strategies, and leveraging tools like the Defense Production Act to prioritize naval production and secure critical materials. Moreover, introducing accountability measures for contractors and rebalancing the retirement-to-construction ratio of maritime vessels will be essential to restoring the Navy’s operational readiness.
By adopting a cohesive strategy that combines legislative action, industry reform, and executive authority, the United States can rebuild its shipbuilding capacity, safeguard its regional allies, and maintain its naval superiority in the face of growing geopolitical threats. Delays are no longer an option, and decisive action is needed to secure America's strategic interests and uphold global stability.
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