On Tuesday, China’s Ministry of Commerce announced sanctions against five subsidiaries of South Korean shipbuilder Hanwha Ocean.
These sanctions seem to be a response to a U.S. investigation regarding China’s hold on the global shipbuilding arena, possibly validating claims made by Washington.
According to reports, the inquiry angered Beijing. A study, prepared by the Office of the United States Trade Representative (USTR) and finalized in 2025, described how “China’s practices are unreasonable and burden or restrict U.S. commerce.”
The investigation, which falls under Section 301 of the Trade Act of 1974, was prompted by a request from five American labor unions in early 2024. This section allows the USTR to take action against unfair foreign trade practices.
As the agency noted, the People’s Republic of China aims to “systematically dominate the shipping, logistics, and shipbuilding sectors,” a strategy that undermines market competition and raises economic security concerns for the U.S.
At the heart of the USTR’s findings was the accusation that the Chinese government strategically subsidized its companies, hindering U.S. involvement in the shipping sector by employing aggressive tactics that threaten free-market businesses.
This situation has resulted in the U.S. dropping to 19th place in global shipbuilding, producing merely five ships annually, while China constructs over 17,000. Consequently, a significant portion of U.S. trade occurs on ships made in China, financed by state-owned entities.
Recently, the U.S. announced new port fees affecting Chinese vessels, implementing recommendations from the USTR. In retaliation, China introduced its own port fees targeting American ships, focusing on U.S. ownership, which represents a minor share of the global shipping fleet.
The revitalization plan for the U.S. shipbuilding industry includes collaborating with Hanwha Ocean, one of South Korea’s leading shipbuilders. Their partnership extends to contracts regarding vessel maintenance, initiated in mid-2024.
In June 2024, Hanwha made a noteworthy move by acquiring Philly Shipyard, a U.S. company recognized for large commercial ship construction. Hanwha’s investment of $100 million, plus an additional commitment of $5 billion for enhancements, might be interpreted as a strategy to divert negative attention from the Chinese government towards South Korean enterprises.
China’s Ministry of Commerce, on Tuesday, prohibited Chinese businesses from dealing with Hanwha’s U.S. subsidiary. Allegedly, concerns over “security risks” and Hanwha’s involvement in U.S. investigations played a role in this decision, although specific details of Hanwha’s assistance to the USTR have not been disclosed.
Industry experts remarked that the immediate impact of these sanctions would be minimal, as few Chinese companies engage with Hanwha’s U.S. subsidiary. However, this serves as a cautionary signal to investors about potential broader measures against Hanwha from China.
“China has just weaponized shipbuilding, indicating it’s prepared to target third-party companies aiding Washington in challenging its maritime dominance,” mentioned Kung Kao, a deputy CEO of consulting firm Reddal.
In response, Hanwha stated it would keep a close eye on the effects of the sanctions, while reaffirming its commitment to invest in the U.S. maritime sector through the Hanwha Philadelphia Shipyard.
