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China Accepts Private Investment To Boost Naval Prowess


China continues to build its naval fleet as tensions rise in South and East Asia. This is good news for the China Shipbuilding Industry Co., a state-run military contractor and the nation’s largest shipbuilder. The company announced plans to accept $1.4 billion in private investment, which will fund the building of larger, more threatening warships. From the Financial Times:

Chinese investors cheered the prospect of being able to invest in the country’s military-industrial complex, driving the Shanghai-listed shares of China Shipbuilding up by the daily limit of 10 per cent. Shares of other companies expected to benefit, such as Shanghai Zhenhua Heavy Industries, a maker of large steel structures, also surged.…

China has ramped up its military spending since the 1980s, with its official defence budget increasing at a double-digit pace in every year but one over the past two decades. Its spending is still less than a quarter of the US which spent $682bn in 2012, according to the Stockholm International Peace Research Institute.

The move toward private investment satisfies both China’s economic and geostrategic interests. Its shipbuilding industry has struggled recently, so an influx of private capital will be well received.

The move will also help China boost its naval power, which has in the past few years become a top priority for the country’s military and political leadership. Today a top Chinese general drove that message home with an order to the Navy to step up its growth, specifically the construction of new ships and bases. “Focus on responding to the complicated and difficult situation, grasp hold of the outstanding problems and points of weakness, accelerate advancing all forms of preparation for fighting at sea,” General Fan Changlong declared.

China’s navy has some catching up to do. Japan is quite powerful at sea, and the PLA-N is still no match for the US Navy, the dominant sea power in the region. But as China continues strengthening its navy, the neighbors are paying attention. Japan, South Korea, Taiwan, the Philippines, even India—all are engaged in a massive naval buildup that isn’t likely to slow down anytime soon.

[Chinese warship image courtesy of Shutterstock]

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  • lukelea

    Selling them the rope.

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