'This Gap Is Very Hard To Narrow': Dem Lawmaker Warns Of China's Shipbuilding Dominance Over US

5 months ago

During a House Select Committee on the CCP hearing last week, Rep. Raja Krishnamoorthi (D-IL) spoke about China's rapid takeover of the shipbuilding industry since the early 2000s.

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Transcript

00:00questions. Ranking member Krishnamoorthi. Thank you, Mr. Chair. I'm going to start

00:06with the topic of ships. The number of major U.S. shipyards has gone from 27 to

00:118, and today we currently don't sell any American ships to China. But China's ship

00:16building industry has skyrocketed. In 2002, as this chart shows, China controlled

00:238 percent of the global shipbuilding market. Today, they control 51 percent, more than

00:30the rest of the world combined. The growth came from the CCP's strategy to dominate

00:36global shipbuilding by excluding foreign ships from its market while giving its own state-controlled

00:43shipbuilders massive grants and guaranteed funding. In fact, Mr. Paul, its largest shipbuilder

00:51is, guess what, the China State Shipbuilding Corporation, which gets billions in equity

00:58infusions from the CCP but regularly operates at a loss, correct? That is indeed correct.

01:06State-owned shipbuilders are also building ships for China's military. As you can see

01:12here, over two decades, China's Navy almost doubled in size from roughly 180 ships to

01:20roughly 360 ships today, while America's Navy is flatlined. The gap between our number

01:28of ships and theirs is widening dramatically. This committee has repeatedly talked about

01:35the importance of deterrence for preventing conflict. But gaps like this between the Chinese

01:41Navy and the American Navy don't exactly deter Xi Jinping from starting a conflict potentially

01:47over Taiwan or the South China Sea. So, Mr. Paul, if we don't reinvigorate our shipbuilding

01:53industry, this gap is very hard to narrow and potentially invites aggression, correct?

01:59MR. PAULSON It certainly does. We have four operating military naval shipyards right now,

02:07just in addition to the commercial shipyards. So our capacity has been extraordinarily diminished,

02:12and it presents us with a clear and present risk.

02:15MR. SCHIEFFER And the Chinese know that. And so this is inviting aggression. We've got

02:19to change this for, if any other reason, national security purposes.

02:24Let me turn to the topic of chips. If ships are the backbone of global sea power, chips

02:28are the backbone of modern life. Chips are so important to our competition, and the competition

02:35is so intense that Mr. Miller wrote this book called Chip War. Now, to win this war, among

02:42other things, China wants to, A, become the world's dominant producer of foundational

02:47or legacy chips, and, B, drive American chip makers out of its market for those same legacy

02:54chips. Now, I have another chart here. As you can see, the CCP is poised to double its

03:01capacity by 2030, between now and 2030, to produce these legacy chips. Mr. Miller, if

03:08the PRC succeeds, these chips will absolutely flood our market, right?

03:12MR. MILLER These ships will certainly arrive in large scale in American markets.

03:15MR. SCHIEFFER It's the exact same, as the chairman alluded to, playbook that we saw

03:22decimate our ship and steel industries. One tool to stop this surge of legacy chips is

03:28something called Section 421. It's a trade tool that allows us to impose targeted, quicker

03:33countermeasures against CCP market disruptions. But, unfortunately, it expired in 2013. Now,

03:39Mr. Paul, I believe it's time to revive and modernize Section 421. What do you think?

03:45MR. PAUL I couldn't agree more. It's one of our recommendations. It would be a smart move

03:49by the Congress.

03:49MR. SCHIEFFER Well, Mr. Chair, I think we should usher this particular safeguard through

03:54Congress in this and future Congresses as well.

03:59Finally, I want to shift to the topic of drones. American companies don't really sell drones

04:04to China. On the other hand, Chinese companies dominate our market. One Chinese company,

04:11DJI, accounts for 90 percent of the U.S. consumer market for drones. DJI dominates our market

04:18because they're cheap, thanks to massive backing from the CCP, including equity investments

04:23from government-controlled funds. Just to be clear, the government invests in Chinese

04:29drone companies. Here's one we found on a popular website today for $300. Okay? Mr. Brie,

04:38I actually brought one of your drones today. This is the Skydio 2 Plus. I'm sure that you

04:45recognize this. Unfortunately, this sells for over $1,000 for consumers. Now, Mr. Brie,

04:54this $1,000 is quite a bit more than the $300 that you can buy a DJI drone for, right?

05:01MR. BRIE That's correct, sir, yes.

05:02MR. SCHIEFFER Now, today, I guess it's no surprise that Skydio pulled out of the U.S.

05:07consumer market last year. But across all three sectors, Mr. Chair, the CCP plan is

05:14very much the same. They deny access to our markets, and then they flood our markets I'm

05:20sorry, they deny their market to our companies, and then they flood our market with their

05:27products, cheaply produced, cheaply made, and heavily subsidized by the CCP. We've got

05:33to take action on this. I yield back.

'This Gap Is Very Hard To Narrow': Dem Lawmaker Warns Of China's Shipbuilding Dominance Over US

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