According to a U.S. think tank, contracts between China’s key state-owned shipbuilding firm and Taiwan’s largest shipping corporation are expected to help China reduce the cost of upgrading its navy. The move also raises security concerns for Taiwan.

Data from the Centers for Strategic and International Studies (CSIS) reveals that Evergreen has purchased 44 vessels from China since 2018. Among the vessels, two were ordered from shipyards that produce Chinese warships, including the China State Shipbuilding Corporation (CSSC).

China State Shipbuilding Corporation is the industry leader in China, with a 21.5% share of the global shipbuilding market. The corporation owns four shipyards including Dalian, Jiangnan, Hudong-Zhonghua, and Huangpu Wenchong.
CSIS data shows that these four shipyards received an order for 211 commercial vessels.

Foreign companies ordered 64% of the vessels through the Chinese company. These foreign firms include one from France, a U.S. ally.

According to the report, China’s opaque business ecosystem offers limited transparency into the flow of capital within its shipbuilding industry, but available evidence indicates that profits from foreign orders likely lower the costs of upgrading China’s navy.

Regarding national security concerns in Taiwan, purchasing merchant ships from China poses a serious security risk for the island as it lives under constant pressure to be annexed by Beijing.

On the other hand, Evergreen is pouring money into the coffers of shipyards assembling warships for the Chinese navy.

According to CSIS, foreign contracts engaged with China State Shipping Corporation or other Chinese shipbuilders pose a “concrete threat to national security” for some countries in the region. It recommends companies should, instead, alternate between using U.S. allies South Korea and Japan as shipbuilding partners.

Data from CSIS also indicates that China State Shipbuilding Corporation’s official filings reveal little about how much foreign sales contribute to China’s navy development.

The commercial satellite photo indicates direct resource sharing between the military and civilian operations at China’s important shipyards.

However, as Reuters reported, Evergreen said that the contracts with the Chinese corporation’s commercial shipbuilding department were “completely different and separate” from China State Shipbuilding Corporation’s military department.

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