Why It Matters

The House Foreign Affairs Committee's East Asia and Pacific Subcommittee held a hearing on July 22 examining how China has come to dominate the global shipbuilding industry and what steps the United States can take to rebuild its maritime industrial base and compete.

The Big Picture

The hearing, titled "Charting a New Course: Countering China's Dominance in Global Shipbuilding," highlighted the decades-long erosion of American shipbuilding capacity. Witnesses testified that over the roughly eight decades since World War II, the United States has lost shipbuilding infrastructure, skilled workers and industrial capacity, while China's state-owned China State Shipbuilding Corp. (CSSC) now produces more commercial ship tonnage annually than the entire U.S. shipbuilding industry has produced since World War II.

The subcommittee framed the central issue as the Chinese Communist Party's use of state resources to support non-market business practices. Combined state support for Chinese shipbuilders includes an estimated $127 billion in financing from state banks and roughly $5 billion in direct subsidies. From 2000 to 2025, China's share of global shipbuilding output grew from less than 5% to more than 53%.

The hearing reflects broader congressional attention to maritime industrial capacity. The 119th Congress has devoted multiple hearings to U.S. shipbuilding and naval readiness, while the Trump administration has launched a maritime action plan encouraging allied foreign direct investment to revitalize underused U.S. shipyards. The plan proposes tax incentives for companies such as HD Hyundai, Hanwha Ocean and Imabari to purchase, modernize and operate shipyards in the United States.

The Office of the U.S. Trade Representative opened a Section 301 investigation into China's maritime, logistics and shipbuilding practices in April 2024 and determined in January 2025 that China's policies were unreasonable and burdened U.S. commerce. The administration suspended the resulting trade actions for one year beginning Nov. 10, 2025, following a U.S.-China trade agreement.

What They're Saying

The hearing featured testimony from three experts: Matthew Funaiole, Vice President and Dracopoulos Chair in Innovation at the Center for Strategic and International Studies; Brent Sadler, Senior Research Fellow for Naval Warfare and Advanced Technology at The Heritage Foundation; and J. James Kim, Program Director of the Korea Program at the Henry L. Stimson Center.

Funaiole testified that military production in China often benefits and shares infrastructure with commercial operations. "It is common in China to see warships being built right alongside tankers and container ships," he said, underscoring the dual-use nature of Chinese shipyards. Funaiole emphasized that his views expressed at the hearing are his own and that his employer, CSIS, does not take policy positions.

Sadler, a former U.S. Navy officer, argued that deterrence requires immediate action. According to his Heritage Foundation analysis, China will not be deterred by prototypes or plans alone; deterrence will require the delivery of added firepower at sea in the months remaining before 2027. His April 2026 Heritage commentary directly connects China's commercial shipbuilding dominance to its accelerating naval modernization.

Kim presented research on bilateral cooperation, noting that He highlighted work by the Stimson Center examining actionable paths for naval and commercial shipbuilding cooperation between the U.S. and South Korea.

The tension centered on how to rapidly rebuild American capacity while managing technical and diplomatic complexities. Rep. Young Kim (R-CA) who chairs the subcommittee, stated that U.S. domestic shipyards are backlogged, understaffed, and structurally fragile. The U.S. military logistics rely on an aging fleet of auxiliary, sea lift, and command vessels.

Rep. Ami Bera (D_CA), the Ranking Member, raised pragmatic concerns about implementation. The United States has lost workforce capacity in shipbuilding and does not have enough capable workers or enough of the next generation going into this line of work, he noted. He emphasized that technical details and resource allocation issues need to be worked through regarding allied shipbuilding cooperation. He raised questions about whether all components of ships need to be built in the United States or if non-critical components can be built elsewhere in Japan or Korea with final installation in the United States.

Bera also flagged visa issues that need resolution to allow Korean and Japanese instructors to train American workers in shipbuilding. Korean companies have expressed interest in making investments in the Philadelphia shipyards and other U.S. shipyards, but regulatory and immigration barriers could slow progress. He noted that South Korea's National Assembly made a decision to invest $350 billion in the United States, with $150 billion allocated to shipbuilding.

Political Stakes

The administration has staked its competitiveness agenda on revitalizing domestic shipyards through allied investment, making this hearing a test of whether Congress will provide necessary legislative backing.

For lawmakers, the hearing revealed broad bipartisan agreement that rebuilding U.S. maritime capacity is a national security priority while exposing disagreements over implementation. Bera's focus on visa policy, workforce development and flexible component sourcing suggests Democrats are likely to pursue regulatory and administrative reforms alongside new legislation. Meanwhile, Kim's introduction of H.R. 8615, the Facilitating Leadership and Expertise through Exchange and Training in Shipbuilding (FLEETS) Now Act, demonstrates Republican interest in expanding workforce training and allied cooperation.

For American workers and shipyards, the stakes are significant. The U.S. commercial shipbuilding industry has steadily declined, with domestic production averaging fewer than three oceangoing cargo ships annually over the past 25 years.

The hearing also highlighted the growing role of U.S. allies. South Korea and Japan have positioned themselves as partners in rebuilding American maritime capacity, with major Korean shipbuilders investing in U.S. facilities. Whether those partnerships succeed could shape Washington's broader industrial strategy and security cooperation in the Indo-Pacific.

The Other Side

Not all experts support aggressive industrial subsidies or expanded domestic-content requirements.

The Cato Institute argues that requiring Americans to pay higher prices for domestically built vessels has not produced a competitive commercial fleet or robust shipbuilding sector. Colin Grabow contends that the United States should recognize that its primary challenge is not a lack of industrial policy tools but policies that fail to leverage comparative advantage and allied shipbuilding capacity.

Meanwhile, the Lexington Institute argues that the Jones Act, which limits cargo transportation between U.S. ports to U.S.-built, U.S.-flagged and U.S.-crewed vessels, remains an important safeguard against Chinese influence in American shipping. That debate was not resolved during the hearing.

What's Next

The subcommittee is expected to continue pursuing legislation aimed at rebuilding U.S. shipbuilding capacity. Bera's comments suggest Democrats may pursue visa reforms and regulatory changes alongside broader industrial policy legislation.

The Trump administration's maritime action plan proposes tax incentives to encourage foreign investment in U.S. shipyards, but congressional action will be necessary to authorize many of those proposals.

A May 2026 House Armed Services Committee hearing similarly urged Navy and Marine Corps leaders to prioritize America's maritime industrial base amid discussions about building certain ships overseas.

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