By Michael Martina
WASHINGTON (Reuters) – Contracts between China’s top state-owned shipbuilding company and Taiwan’s leading shipping company are likely to lower the cost of upgrading China’s fleet, posing security concerns for the island, as Beijing claims, a U.S. think tank said Thursday.
China State Shipbuilding Corp (CSSC) is a key manufacturer of ships for China’s fast-growing People’s Liberation Army Navy (PLAN), and is believed to be building its third aircraft carrier.
Taiwan’s Evergreen Marine Corp. has purchased 44 ships from China since 2018, all but two of which were ordered from shipyards producing Chinese warships, including CSSC, the Center for Strategic and International Studies (CSIS) said in a report https: // features. csis.org/china-shadow-warships.
The Washington-based think tank said that foreign companies, including from US allies such as France, also buy ships from CSSC, which the US has placed on an investment blacklist for US individuals and companies because of their Chinese military connections.
CSIS said that although there is limited transparency about the flow of foreign capital in China’s shipbuilding industry, “available evidence indicates that profit from foreign orders is likely to lower the cost of upgrading China’s fleet.”
CSIS called the foreign contracts a “tangible threat to national security” for some democracies in the region, saying companies should consider US allies South Korea and Japan as alternative shipbuilding partners.
Democratically ruled Taiwan has complained of increased military pressure from Beijing, which has never relinquished the use of force to bring the island under its control.
The CSIS study included commercial satellite images from February 2022 showing at least three Evergreen hulls under construction near China’s newest aircraft carrier at CSSC’s subsidiary Jiangnan Shipyard near Shanghai. Evergreen vessels have also been added alongside Chinese naval cruisers and destroyers, it said.
The images “suggest that there is a direct sharing of resources between military and civilian operations at China’s main shipyards,” CSIS said.
Evergreen said in a statement that all of its container ship projects are undergoing international bids and that its contracts with CSSC’s commercial shipbuilding division were “completely different and separate” from CSSC’s military division.
“We believe that civilian commercial shipbuilding activities have nothing to do with national naval projects,” it said, adding that it discloses information about its orders to investors and authorities.
China already has the world’s largest fleet with a larger number of warships and submarines than the United States.
Taiwan rejects China’s sovereignty claims, saying only the island’s people can determine their future.
(Reporting by Michael Martina; Editing by Mary Milliken and Richard Pullin)