U.S. Navy Take Notice: China is Becoming a World-Class Military Shipbuilder (Page 3 of 4)

CSIC Bohai Shipbuilding Heavy Industry complex near Huludao (where China builds its nuclear submarines) is a top candidate due to its large, covered building sheds where carrier parts could be fabricated in modular fashion and out of the view of satellite surveillance. The company says it has the “largest indoor seven-step” ship construction facilities in China. This facility, together with CSSC’s large new Changxing Island yard, and CSIC’s Dalian yard—which fitted out the carrier Liaoning that just entered PLAN service—are the three leading candidates to build China’s indigenous carriers.

6. China will retain a military shipbuilding cost advantage

We project that for at least the next five years, Chinese shipbuilders will have a substantial labor cost advantage over their counterparts in South Korea, Japan, and the U.S. CSSC’s Jiangnan shipyard can likely deliver a Type 052C destroyer for 24% less than it costs Korea’s Hyundai heavy Industries to produce a KDX-III destroyer. Likewise, according to disclosures in the July 2011 issue of Shipborne Weapons, Wuchang shipyard can produce a late model diesel electric sub such as the Type 041 for roughly 47% less than it would cost South Korea’s DSME to make a Type 209 submarine. The lower labor cost in China likely serves as a core driver. This may help explain the larger Chinese cost advantage in building submarines, since advanced submarines can require substantially larger number of man-hours to build than surface ships do.

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7. China’s neighbors feel increasingly compelled to augment their naval forces in response to Chinese warship production

South Korea has decided to expand its procurement of advanced diesel-electric submarines to include nine KSS-III 3,000-ton submarines by 2020 and nine 1,800-ton subs by 2018. This acquisition will basically double the size of the country’s current sub force and substantially enhance its capabilities, since the biggest boats in the fleet are currently 1,800-ton vessels. South Korea has also elected to double its Aegis destroyer purchases over the next decade.

Similarly, Vietnam’s maritime friction with China and fear of the PLAN’s growing power is making Hanoi into one of the Russian defense industry’s star customers. Vietnam has ordered six Kilo-class diesel submarines from Russia and is likely to take delivery of its first Kilo by the end of 2012. Hanoi is also adding advanced Russian anti-ship missiles and stealthy Gepard-class missile armed patrol boats to its naval force.

8. China now has the potential to become a significant exporter of diesel submarines and smaller surface warships

China’s shipbuilders are becoming increasingly competitive in terms of the ratio of cost to combat power they can deliver. For instance, the July 2011 issue of Shipborne Weapons reports that China will supply 6 potentially Air-Independent Propulsion (AIP)-equipped submarines to Pakistan for as little as 1/3 the unit price at which European shipyards would be able to supply comparable boats.

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