China and the War of Shipyards and Factories

Journal of Political Risk, Vol. 7, No. 10, October 2019

By William R. Hawkins

Chinese aircraft carrier group, including J-15 fighters and helicopters, trains in the South China Sea in late December, 2016. Visual China Group via Getty Images.

Satellite images show that China is making rapid progress in building its new Type 02 aircraft carrier at the Jiangnan Shipyard in Shanghai. The Type 02 is a larger design than Beijing’s first two carriers which were based on Soviet-era light carriers of about 67,000 tons and which lacked catapults for launching first-rate fighters. They used “ski jumps” to put planes into the air, limiting them to the small, short-range J-15 “Flying Shark” fighter-bombers. The Russian-built/China modified Type 01 can only carry 24 of these warbirds, though the China-built 01A, which is about to deploy, may be able to carry a few more. The Type 02 is a much larger design more in line with American carriers. At an estimated 80,000+ tons, it will be able to carry 40+ fighters as well as supporting aircraft such as early warning and control planes. In comparison, the typical U.S. Navy carrier has 60+ fighters along with other support aircraft. They are also nuclear-powered which the Chinese carriers are not. This does not mean, however, that American naval-air superiority is assured.

China is expected to build six Type 02 carriers and it is enlarging its shipyards not only to make this easier, but to build even larger warships in the future. China is already the world’s largest commercial shipbuilder, an industry that the U.S. has allowed to wither away to almost nothing. Beijing’s mobilization capacity is thus enormous, as is its ability to service and repair its naval units. Too often when the media covers comparisons of fleet strength and the capability of individual ship classes the impression is given that these war machines just drop out of the ether, fully equipped and ready for action. In reality, they are produced by hard work and brilliant engineering from an industrial infrastructure that has taken decades to create and which requires a steady input of capital and technology to be maintained. “It’s the economy, stupid” applies to national security. If the manufacturing base of a country deteriorates, so will its military capabilities.

British historian Paul Kennedy argued in his seminal The Rise and Fall of the Great Powers: Economic Change and Military Conflict 1500-2000, “how a Great Power’s position steadily alters in peacetime is as important to this study as how it fights in wartime.” And those peacetime changes are rooted in comparative economic performance. As Kennedy, who is now director of the International Security program at Yale, stated, “It was as clear to a Renaissance Prince as it is to the Pentagon today that military power rests upon adequate supplies of wealth, which in turn derive from a flourishing productive base, from healthy finances and from superior technology.”

This is precisely why China’s rise to be the world’s second largest economy, with its resources under the command of an ambitious Communist regime, poses a grave threat to American security interests. It is a renewed era of Great Power competition. In contrast, despite its grand history as the “arsenal of democracy”, whose unmatched production capacity proved decisive in World War II and the Cold War, U.S. policy has faltered over the last twenty years. Its lethargy combined with the massive transfer of capital and technology to China via an irresponsible “free trade” policy has given Beijing the ability to narrow the gap to become a “peer competitor” with aspirations to become the dominant power. As R. Stephen Brent of the Eisenhower School for National Security and Resource Strategy has argued, “Foreign technology—provided by American companies operating in China, U.S. universities educating Chinese students, and China’s aggressive pursuit of intellectual property and cyber theft—has been a central element of China’s growth methods.”

The U.S. needs to expand its fleet to meet the Chinese challenge. Beijing has a geographical advantage that will require the American navy to be substantially larger than its Asian rival. Though Beijing has “blue water” ambitions already demonstrated in deployments through the Indian Ocean to Africa and the Middle East, the main strength of its fleet will remain along the Pacific Rim. It will menace the “first island chain” running from Japan and Korea through Taiwan and Philippines past Vietnam and Singapore to the Malacca Strait off Indonesia. Its new bases in the South China Sea will support its large home fleet, as will mainland-based aircraft and missiles. In contrast, the U.S. Navy has global commitments and cannot concentrate its full strength in one region. The “pivot” to Asia declared by President Barack Obama planned a deployment of 60 percent of the fleet to this area, but without expansion, this will not be enough.

The British Royal Navy faced a similar problem leading up to World War I. When Germany surpassed Great Britain in industrial output it changed the balance of power and drove the bloody history of the 20th Century. Germany started a battleship race which England was hard-pressed but able to meet. Yet to maintain superiority over the High Seas Fleet off its own coast, the Royal Navy had to withdraw warships from around the world back to home waters. This left its Asian possessions vulnerable to a rising Japan.

It was then the U.S. who faced the same problem leading up to World War II. The Japanese fleet was supposed to be smaller than America’s. Naval arms control agreements had set a ratio of 5-3 in America’s favor for capital ships. Japan cheated on these agreements while the U.S. failed to build up to its allowed limits; so the gap closed. The U.S. could not deploy its full strength to the Pacific when it had security concerns in the Atlantic. Tokyo knew it had only a fraction of America’s economic capacity, but gambled that its initial edge in the combat zone would give it so many victories that the war would be won before the U.S. could mobilize. This proved wrong, but weakness erodes deterrence as does domestic political strife. Enemies have constantly underestimated the will of the American people when aroused. Pearl Harbor (like 9/11) sparked a reaction far different than what enemies expected. It is motivated patriotic determination that turns economic capability into victorious national power.

It is far less expensive in blood and treasure to deter war by adhering to the tried and true adage of peace through strength. It is how the U.S. prevailed in the Cold War. In a fierce contest, the Soviets never attained the edge they needed before collapsing in the attempt. America is struggling to relearn the lessons of success as the homework piles up.

The Navy’s reports to Congress on the Annual Long-Range Plan for Construction of Naval Vessels for Fiscal Year 2020 and Long-Range Plan for Maintenance and Modernization of Naval Vessels for Fiscal Year 2020 discuss the need to expand the nation’s industrial infrastructure to support a growing fleet. The Long-Range Plan for Construction declares “A healthy and efficient industrial base continues to be the fundamental driver for achieving and sustaining the Navy’s baseline acquisition profiles. Our shipbuilding and supporting vendor base constitute a national security imperative that is unique and must be protected.” Yet, it warns, “We are at a level of fragility…the industrial base will continue to struggle and some elements may not survive another ‘boom/bust’ cycle.” The Long-Range Plan for Maintenance and Modernization argues that “sustaining 355 battle force ships requires an increase and upgrade of public and private industrial capability and capacity.” Both reports present an industrial base that is operating at the very edge of capacity.

These warnings from last Spring were not just talk. As we move into Winter, the Navy is now doubting that it can reach the goal of 355 ships set by President Donald Trump and confirmed by Congress in 2018. Navy vice chief Adm. Robert Burke told reporters on October 25 that given expected funding from Congress, “We can keep around 305 to 310 ships.” This would be a step up from the 290 ships currently in service, but would most likely see the Chinese fleet become larger than the U.S. fleet in first line warships within the next decade. Such a shift in the balance of power would have a profound negative impact on security and stability in Asia and beyond.

And the problem is not just budget numbers for ordering ships. For example: the ramping up of production for submarines has hit constraints in the supply chain of parts and in the labor market for highly skilled workers. The issue has been raised about whether industry can lay down two Virginia-class submarines a year (which take three years to complete), or drop back to only one. Reduced construction would mean the undersea fleet would shrink dramatically as the Los Angeles– class boars built during the Cold War reach retirement age in the next decade. China already has more attack submarines than does the U.S. and is building more at a faster pace. They are not nearly as advanced on a boat-to-boat basis, but their weapons are potent and they don’t expect the odds to be even.

There was a precipitous decline in defense efforts after the Cold War when it was foolishly believed that the world was going to be a different kind of place than it has been throughout recorded history. When President Ronald Reagan left office, his goal of a 600 ship fleet had almost been reached. The Navy’s slide to less than half that strength today has left twin legacies that retard recovery despite President Trump’s strong push for expansion. Force levels not only need to be reconstituted with improved technologies, but the supply of key components, shipyard capacity and expert labor have dwindled. A generation has been lost, and the future has been imperiled.

So when reading about the “trade war” remember that the basis for the dispute is the economic rivalry that is at the heart of national security and the balance of power. Policy must turn business towards building up American capabilities and away from helping China rise further. It is a return to Cold War thinking; but we must accept the world as it is and get back to work.

William R. Hawkins is a consultant specializing in international economic and national security issues. A former economics professor, he has served on the professional staff of the U.S. House Foreign Affairs Committee.