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Wednesday, May 22, 2024

US Riles China with Shipbuilding Probe

Maritime Activity Reports, Inc.

April 18, 2024

© Igor Groshev / Adobe Stock

© Igor Groshev / Adobe Stock

The United States has launched an investigation into alleged unfair practices within China's shipbuilding and maritime industries, drawing ire from Chinese officials.

The probe was launched Wednesday by U.S. Trade Representative Katherine Tai in response to a petition filed by five national labor unions accusing China of using "non-market policies that are far more aggressive and interventionist than any other country" to obtain dominance over the global shipbuilding, maritime and logistics sector.

"The American commercial shipbuilding industry is a shell of its former self. . . The biggest obstacle to the industry's recovery is the unfair trade practices of the world's largest shipbuilding nation: China," the 134-page petition states.

"China has seized market share, suppressed prices and created a worldwide network of ports and logistics infrastructure that threaten to discriminate against U.S. ships and shipping companies, disrupt supply chains and undermine vital national security interests," according to the petition.

Alleged unfair practices cited in the petition include "policy loans from state-owned banks, equity infusions and debt-for-equity swaps, the provision of steel plate from state-owned steel producers at below market prices, tax preferences, grants, and lavish financing from China’s state-owned export credit agencies", among others.

"The petition presents serious and concerning allegations of the PRC’s longstanding efforts to dominate the maritime, logistics, and shipbuilding sectors, cataloguing the PRC’s use of unfair, non-market policies and practices to achieve those goals," Tai said in a statement announcing the investigation's launch under Section 301 of the Trade Act of 1974.

"The allegations reflect what we have already seen across other sectors, where the PRC utilizes a wide range of non-market policies and practices to undermine fair competition and dominate the market, both in China and globally," Tai said. "I pledge to undertake a full and thorough investigation into the unions' concerns."

China's response
China quickly hit back to denounce the investigation, issuing a statement several hours after U.S. President Joe Biden discussed the probe during a speech at the United Steelworkers headquarters in Pittsburgh, Pa.

The official statement from China's Ministry of Commerce called for a stop to the investigation and described the move as a politically motivated "mistake". 

"China strongly opposes and is firmly against this move," China's Ministry of Commerce said. "We urge the U.S. to respect facts and multilateral rules, immediately cease its erroneous actions and return to the rules-based multilateral trading system."

China's commerce ministry said the petition unfairly blames Beijing for the U.S. shipbuilding industry having "lost its competitive advantage many years ago due to over-protection".

"The United States provides hundreds of billions of dollars in discriminatory subsidies to its own industries, but accuses China of adopting so-called 'non-market practices.' In fact, the development of China's industries is the result of enterprises' technological innovation and active participation in market competition. The U.S. accusation is simply untenable."

"China will pay close attention to the progress of the investigation and will take all necessary measures to resolutely defend its rights and interests."

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