Is China's shipbuilding industry crushing its competitors? The US brandishes its 'Section 301' weapon again.

Over the past 20 years, the Chinese government has used a series of non-market policies to dominate the global shipbuilding industry, suppressing all competitors and threatening US national security. —Following a joint petition from five major unions, the US government may once again wield the "Section 301" stick, this time targeting China's rapidly developing shipbuilding industry.

Did the Chinese government provide hundreds of billions of dollars in subsidies to its shipbuilding industry? US unions petition for an investigation.

According to foreign media reports, on March 12, five US unions jointly submitted a petition to Katherine Tai's office, the US Trade Representative, requesting an investigation into China's allegedly "unfair" policies and practices in the maritime logistics and shipbuilding industries.

The 126-page petition states: "China's dominance of the global shipbuilding, maritime, and logistics industries is built on non-market policies that are more aggressive and interventionist than any other country or region."

The petition urges the Biden administration to impose port fees on ships built in China and use the collected fees to establish a fund to revitalize the US shipbuilding industry. It also suggests the government take all other actions within the President's authority to increase demand for US-built ships, requiring that US exports of LNG, fuel oil, etc., be transported via US-built tankers.

The petition states that these collected fees should be used "not only to address the hundreds of billions of dollars in unfair government support documented in this petition and found during the investigation by the Office of the United States Trade Representative (USTR), but also to offset other unreasonable, discriminatory, and unfair acts, practices, and policies documented in this petition."

It is understood that this petition was initiated by the United Steelworkers (USW), with other participating unions including the International Association of Machinists and Aerospace Workers, the International Brotherhood of Boilermakers, the International Brotherhood of Electrical Workers, and the maritime trade department of the AFL-CIO, the largest union organization in the United States.

The unions believe that over the past two decades, the Chinese government, through the implementation of various non-market policies, has dominated the global transportation and logistics network and is using commercial shipbuilding to dominate all aspects of global trade, "suppressing" all competitors and threatening US "national security." Meanwhile, US shipbuilding capacity has continued to decline.

David McCall, International President of the United Steelworkers, said that the US once had nearly 30 large shipyards, but now only a small fraction remain. He highlighted the correlation between shipyard construction and the disappearance of over 70,000 shipbuilding jobs, not to mention the secondary jobs supported by the industry.

According to McCall, a single merchant ship may require approximately 13,000 tons of structural steel, 60,000 gallons of paint, 130 miles of wire, and tens of thousands of other products that union members take pride in. He claims: "China is using commercial shipbuilding to dominate all aspects of global trade, suppressing all competitors. If we don't act quickly, we will soon be dependent on China, not only for the products their ships bring to our ports, but for the ships themselves."

An analysis report from the Center for Strategic and International Studies (CSIS) states that through countless state-led industrial campaigns, China has provided hundreds of billions of dollars in subsidies to state-owned enterprises, aiming to dominate the global commercial shipbuilding industry through strategic policy efforts.

In addition to the economic impact, McCall points out that the increasingly severe imbalance in the shipbuilding industry also poses a threat to US national security, "China now has the world's largest navy, surpassing the United States." He believes it is necessary to rebuild the merchant fleet to enhance US national maritime capabilities and strengthen the supply chain for both military and commercial shipbuilding.

Tai: China "poses real risks to our supply chains," looks forward to reviewing the case.

It is understood that the joint petition submitted by the US unions is based on Section 301 of the US Trade Act of 1974. Section 301 authorizes the US President to take all appropriate actions (including retaliatory or sanctioning actions) to cause a foreign government to withdraw any unjust, unreasonable, discriminatory, or in violation of international trade agreements, local laws, policies, or practices that burden and restrict the development of US commerce. Investigations into trade practices can be initiated by the Office of the United States Trade Representative itself or applied for by enterprises or industry organizations.

This investigation is initiated, investigated, judged, and enforced by the United States itself, once considered the "last weapon" for the United States to deal with trade frictions with other countries. However, after the World Trade Organization (WTO) was officially established in 1994, the number and frequency of unilateral sanctions launched by the United States have been significantly reduced.

The United States has used Section 301 against China many times in history. The most recent time was in 2018, when former US President Trump used this regulation to impose unilateral tariff trade sanctions on China, triggering the 2018 US-China trade war.

This petition is supported by the Shipbuilders Council of America, a national industry association representing the US shipbuilding, maintenance, and repair industries. Council President Matthew Paxton stated: "The Council applauds the unions' efforts. China has waged a carefully orchestrated state-led industrial campaign in shipbuilding and ship repair aimed at driving out global competition, controlling international shipping, and weakening global, and especially US, manufacturing."

US Senators Tammy Baldwin and Bob Casey also wrote to the Biden administration in support of the trade petition, representing a growing number of policymakers committed to revitalizing the shipbuilding industry.

McCall praised the collaboration between the unions and the Biden administration on establishing worker-centered trade policies and enhancing US manufacturing capabilities. He stated: "Revitalizing the commercial shipbuilding industry will enable the US to expand these investments, ensure a stable supply of domestic goods, and strengthen the middle class."

Recently, US President Biden announced a $20 billion investment to strengthen domestic crane manufacturing in the US to counter China's leading position in key port infrastructure production markets around the world, including the US.

Regarding the petition submitted by the unions, US Trade Representative Tai stated: "We see China creating dependencies and vulnerabilities in multiple sectors, including steel, aluminum, solar, batteries, and critical minerals, harming American workers and businesses and posing real risks to our supply chains."

Tai said she looks forward to reviewing the case and will decide within 45 days whether it warrants an investigation. Tai pledged to continue "fighting every day" to "rebuild American manufacturing and strengthen our supply chains."

Experts point out that Biden is unlikely to reject this investigation request, otherwise his Republican presidential rival Trump would almost certainly criticize Biden for not accepting the request. Once this investigation is launched, it will not only have a significant direct negative impact on China's maritime logistics and shipbuilding industries, but it may also trigger the US government's national security concerns about China's international shipping capabilities.

It is worth mentioning that the petition also expresses concerns about the "National Transportation and Logistics Public Information Platform (LOGINK)", which provides global supply chain logistics data, stating that this "Chinese government-supported platform raises national security concerns."

Sources familiar with the matter point out: "90% of US military cargo is transported via commercial ships, and the CCP will know the location and destination of this cargo. LOGINK is part of the CCP's overall strategy to gain national dominance and power."

The US Department of Transportation recently claimed that China is promoting data standards to facilitate the use of LOGINK in key port infrastructure, and it is highly likely to provide China with the ability to access or collect "sensitive logistics data".