The Chinese Commerce Ministry on Tuesday announced sanctions against five subsidiaries of South Korean shipbuilding company Hanwha Ocean.
The sanctions appeared to be retaliation for a U.S. investigation into China’s dominance of global shipbuilding — and the sanctions arguably demonstrate that Washington’s allegations are correct.
The investigation that angered Beijing was launched by the U.S. Trade Representative (USTR) in April 2024 and completed in May 2025. The investigators found that “China’s practices are unreasonable and burden or restrict U.S. commerce.”
The inquiry was conducted under Section 301 of the 1974 Trade Act, which authorized USTR to investigate unfair foreign trade practices and implement measures to counteract them. Five U.S. labor unions petitioned USTR to investigate China in March 2024, and the request was quickly granted.
The agency determined that the People’s Republic of China (PRC) systematically targeted the “maritime, logistics, and shipbuilding sectors for dominance” with a strategy that “undermines fair, market-oriented competition, increases economic security risks, and is the greatest barrier to revitalization of U.S. industries.”
The heart of USTR’s finding was that the Chinese government deliberately and strategically subsidized Chinese corporate activities designed to sabotage every aspect of America’s involvement in the shipping industry, using Beijing’s deep pockets and iron regulatory fist to enable tactics that would bankrupt free-market corporations.
As a result of this strategy, USTR noted that America is now ranked 19th in global shipbuilding and builds only about five ships a year, while the PRC is building over 17,000 ships per year. This means the bulk of U.S. international trade is “carried out on vessels made in China, financed by state-owned Chinese institutions, owned by Chinese shipping companies, and reliant on a global maritime and logistics infrastructure increasingly dominated by China.”
Last week, the U.S. announced it would impose new port fees on Chinese vessels, implementing one of USTR’s recommended actions. China quickly responded with its own “tit-for-tat” port fees on American ships. China’s port fees were based on American ownership, which adds up to about five percent of the worldwide shipping fleet — far larger than the roughly 0.1 percent of ships actually built by the United States.
America’s plan for revitalizing its shipbuilding industry included a partnership with South Korea’s Hanwha Ocean, one of the top shipbuilding companies in South Korea. Hanwha’s growing relationship with the United States included a series of contracts with the U.S. Navy for ship maintenance that began in July 2024.
In June 2024, Hanwha acquired a U.S. company called Philly Shipyard, a major builder of large commercial vessels. Hanwha invested $100 million to complete the acquisition and pledged over $5 billion in further investments to upgrade construction capabilities. This appears to be the action that turned Beijing’s malevolent eye toward the South Korean company.
The Chinese Commerce Ministry on Tuesday banned Chinese companies from doing business with Hanwha’s subsidiaries in the United States, supposedly because they presented “security risks,” but also explicitly citing Hanwha’s cooperation with “relevant investigative activities” by the U.S. government. The ministry did not specify exactly what Hanwha did to assist the USTR investigation that was so objectionable.
Industry analysts said the sanctions imposed by China on Tuesday would have little immediate effect, because not many Chinese entities are doing business with Hanwha’s American subsidiaries, but the move was a warning shot that made investors nervous because China might expand the sanctions to target Hanwha in South Korea.
“China just weaponized shipbuilding. Beijing is signaling it will hit third-country firms that help Washington counter China’s maritime dominance,” said Kun Cao, deputy chief executive of the Reddal consulting firm.
Hanwha said on Tuesday it would monitor the impact of China’s sanctions, but pledged it would continue its “investments in the U.S. maritime industry and via Hanwha Philly Shipyard.”
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