China’s Shipbuilding Dominance: A Conversation with Eric Labs and Matthew Funaiole

In this episode of the ChinaPower Podcast, Dr. Eric Labs and Dr. Matthew Funaiole join us to explore the widening gap in U.S.-China shipbuilding capabilities. They begin by examining the evolution in U.S.-China shipbuilding industrial capacity since World War II. Dr. Labs points out that while China’s shipbuilding industrial capacity has grown substantially due to large-scale state subsidies and government support, the U.S. has steadily fallen behind in production capacity since the 1960s with the rise of Japan and South Korea shipbuilding industries and the end of construction differential subsidies in the early 1980s. Dr. Funaiole further emphasizes that this industrial capacity disparity is particularly concerning as many foreign companies from Europe, Japan, South Korea, and Taiwan are purchasing commercial ships from Chinese shipyards, which effectively offsets Chinese naval shipbuilding production costs and facilitates technological transfer. Both guests warn that this widening shipbuilding gap could impact U.S. warfighting and logistics capacity in a prolonged conflict. Dr. Labs concludes with four policy options for the U.S.to consider, including improving labor issues and enhancing workforce attrition within the shipbuilding industry, legislation changes to allow the U.S. to purchase warships from allies, designing smaller warships, and incorporating unmanned maritime platforms in the navy. Finally, Dr. Funaiole recommends a change in policy approach that combines national security and economic outcomes that specifically target Chinese shipyards that are dual use in nature, while ensuring sustained efforts in revamping the U.S. shipbuilding industry across future administrations. Dr. Eric Labs is the Senior Analyst for Naval Forces and Weapons at the Congressional Budget Office in Washington, D.C. He specializes in issues related to the procurement, budgeting, and sizing of the forces for the Department of the Navy. Dr. Labs has testified before Congress numerous times and published many reports under the auspices of the Congressional Budget Office as well as articles and papers in academic journals and conferences, including the U.S. Naval Institute’s Proceedings, Sea Power magazine, the Naval War College Review, and Security Studies. He has given presentations to a variety of industry, government, and academic audiences. Dr. Matthew P. Funaiole is vice president of the iDeas Lab, Andreas C. Dracopoulos Chair in Innovation, and senior fellow in the China Power Project at the Center for Strategic and International Studies (CSIS). He specializes in using data-driven research to address complex policy issues, with a focus on Chinese foreign policy, dual-use technology, and maritime trade. In 2022, he launched the “Hidden Reach” initiative, which leverages open-source intelligence to uncover poorly understood sources of Chinese influence and examine how China advances its strategic interests through commercial and scientific ventures. From late 2015 through mid-2020, he was the principal researcher for the ChinaPower website. Prior to joining CSIS, Dr. Funaiole taught international relations and foreign policy analysis at the University of Saint Andrews in Scotland, where he also completed his doctoral research.