Heightened Scrutiny on China’s Shipping and Shipbuilding Sectors

The United States has added China’s largest shipping company, Cosco Shipping Holdings Co., and two major shipbuilders, China State Shipbuilding Corp. and China Shipbuilding Trading Co., to its military blacklist. Announced via a Federal Register filing, this move reflects growing concerns over these firms’ alleged links to China’s People’s Liberation Army (PLA).

While the blacklist imposes no direct penalties, it acts as a deterrent for US firms to engage with the named entities and signals intensified scrutiny of China’s dominant maritime sector.

Geopolitical Tensions Amplify Focus on Shipbuilding Dominance

China’s maritime industry, which accounts for over half of the world’s merchant vessel production, has become a focal point in the geopolitical rivalry between Beijing and Washington. US officials have repeatedly expressed concerns over the disparity between the two nations’ shipbuilding capacities, with one US container ship constructed for every 359 vessels produced in China, according to Congressman Raja Krishnamoorthi.

The Pentagon’s blacklist also included Chinese tech giant Tencent Holdings Ltd., battery manufacturer Contemporary Amperex Technology Co. Ltd., and energy major Cnooc Ltd., broadening the scope of industries under scrutiny.

Impact on Markets and Global Trade Dynamics

Cosco’s shares fell by 4.4% in Hong Kong following the announcement, while Cnooc experienced a smaller 1.6% drop. Neither company has commented on the blacklisting. Cosco has faced previous sanctions, including penalties in 2019 for transporting Iranian oil, while Cnooc has been targeted for its offshore energy operations, including projects in the Gulf of Mexico.

Implications for Global Supply Chains

This move comes as supply chains remain under stress from the disruptions exposed during the Covid-19 pandemic. The US’s focus on maritime transport reflects the increasing importance of shipping lines and ports in the broader geopolitical competition. Rising tensions may force Chinese companies like Cnooc to reconsider their US-based assets, signaling potential ripple effects for global trade and energy markets.

Washington’s latest actions underscore the growing rivalry between the world’s two largest economies, with the maritime sector emerging as a critical battleground.