On October 14, New Zealand Railways Minister Winston Peters confirmed that the New Zealand government had handed over orders to build two large ferries to Guangzhou Shipyard International, a subsidiary of China Shipbuilding Group Co., Ltd.

According to a press release issued by the New Zealand government, these two dual-purpose road-rail ferries are 200 meters long, each capable of carrying about 1,500 passengers and 40 train carriages. They are expected to be delivered in 2029 to connect the north and south islands of New Zealand. Peters confirmed that the new ferry will be built by Guangzhou Shipyard International, but the specific cost has not yet been finalized and is still under negotiation.

¡°We plan to publish a detailed statement by the end of this year explaining the content of the agreement we have reached and how we have saved billions of New Zealand dollars for taxpayers by canceling the iRex project and returning to the pragmatic proposals we put forward in May 2020.¡±

New Zealand Railway Minister Winston PetersSocial Media

The New Zealand Post website on the 14th that the iRex project, led by the former Labour government of New Zealand, was originally planned to be undertaken by the South Korean modern Taipu shipyard, but was cancelled in December 2023 after the new government came to power due to the cost of port infrastructure.

The iRex project was initiated in 2018 to replace years old existing ferries between New Zealand¡¯s Southern North Island. The project was originally planned to purchase two large ferries, while rebuilding port facilities in Wellington and Pickton to meet the demand for new vessels.

During construction, the cost of the project rose from a single ship of $7.75 billion in 2018 (about RMB 31,5 billion) to $14.5 billion in 2021. In 2023, the Ministry of Finance of New Zealand warned that the project¡¯s budget could continue to rise to close to $4 billion. After the new government took office, it refused additional funding, withdrawing orders with South Korea¡¯s modern Taupo shipyard. In August this year, New Zealand¡¯s state-owned railway company KiwiRail settled with South Korea¡¯s modern Taupo shipyard, paying South Korea¡¯s company $1.4 billion as a settlement for the project¡¯s cancellation.

According to the calculation, the compensation of $1.4 billion New Zealand plus the corresponding amounts previously paid, the total expenditure of the iReX project was about $6.7 billion New Zealand. The money broke, but the New Zealand side has not even seen the shadow of the new ship so far, only one concept.

Concept map of new ship at Hyundai Mipo Shipyard in South Korea New Zealand's state-run railway company KiwiRail

Peter also praised China¡¯s shipbuilding capabilities, saying ¡°we want to provide New Zealand¡¯s taxpayers with the best possible deals and capable shipbuilders,¡± while Shenzhen International, China¡¯s largest modern and integrated shipbuilding company, founded in 1954, is listed in both Hong Kong and Shanghai, and its capabilities give us ¡°high confidence in our ferry upgrade plans.¡±

According to data from the U.S. think tank strategy and international research center (CSIS), China is currently the world¡¯s largest shipbuilder, with more shipbuilders than the rest of the world combined.This led the U.S. government to put pressure on China Shipping Group Limited and its subsidiaries, including Hiroshima International, to include the ¡°list of Chinese military enterprises¡± and restrict U.S. investment and holdings, but did not ban trade with these enterprises.

In response to journalists¡¯ deliberate questions about national security issues, Petros replied that the New Zealand government would do its best to investigate throughout the process to ensure that the vessels were obtained in accordance with the requirements, and that as far as national security is concerned, ¡°the Chinese side also understands this, and they are not stupid.¡±

China's Foreign Ministry has previously responded to the U.S. inclusion of Chinese enterprises in the so-called "list of Chinese military enterprises", saying that China firmly opposes the U.S. generalization of national security concepts, sets up discriminatory lists for various purposes, unreasonably suppresses Chinese enterprises and undermines normal economic and trade cooperation. China urges the U.S. side to immediately correct the above discriminatory practices, and provide a fair, fair and non-discriminatory environment for Chinese enterprises to operate.

Extended reading

Facing the U.S. government's unilateral bullying, China's counterattack and combination of punches have not stopped.

October 14 is the date on which the U.S. unreasonably imposed port charges on Chinese-built vessels, and it is also the day on which China lawfully defended and imposed port charges on U.S. vessels.

On the same day, China further stepped up its efforts and announced that it would take countermeasures against five related US subsidiaries of Hanwha Ocean Co., Ltd., prohibiting organizations and individuals in China from conducting relevant transactions, cooperation and other activities with them.

China has also announced that it will launch an investigation into the affected security and development interests of the shipping industry, shipbuilding industry and related industry supply chain, and will adopt appropriate measures in due course based on the investigation.

As soon as the news came out, Hanwha Ocean's share price fell more than 8%. China's series of thunderous counterattacks also quickly attracted the attention of foreign media, especially South Korean media.

¡°China-U.S. conflict fireworks, South Korea is plagued!¡± the Korean media shouted, China targeted the Korean ocean, so that South Korea¡¯s shrimp was involved in the big whale dispute.

Many media have mentioned Hanwha Ocean's close ties with the United States. Industry insiders have noticed that, unlike the increase in port fees, the sanctions against Hanwha Ocean have accurately hit specific companies and had a huge impact.

Some scholars bluntly said that considering Hanwha Ocean plays a key role in the Trump government's plan to revitalize the shipbuilding industry, the sanctions against Hanwha Ocean can be said to be "killing two birds with one stone," which not only hits the Trump government's shipbuilding plan, but also targets Hanwha's defense products using China rare earths, which will become an important negotiation "chip" in China's hands.

South Korean President Li made a speech during a visit to Korean Hunan Group¡¯s shipbuilding plant

What has Hanwha Ocean done? In fact, China has already made it clear.

A spokesperson for China's Ministry of Commerce said that the United States has begun to implement the final measures of the 301 investigation into China's maritime, logistics and shipbuilding fields, seriously violating international law and basic norms of international relations, and seriously damaging the legitimate rights and interests of China companies. Hanwha Marine Co., Ltd.'s relevant subsidiaries in the United States assisted and supported relevant investigation activities of the U.S. government, endangering China's own sovereignty, security and development interests.

The fact is also true.

For some time, South Korea has played the role of "providing charcoal in the snow" in the Trump administration's plan to "Make American Shipbuilding Great Again" (MASGA).

The U.S. has long been struggling with the weakening of the shipbuilding industry. Currently, the U.S. accounts for less than 1 percent of the world¡¯s commercial shipbuilding, far below China¡¯s about 60 percent, and South Korea ranks second with 22 percent.

In July, Zhang Zhengxi, director of the Commercial Policy Bureau of the Ministry of Industry and Commerce of South Korea, revealed that in the tariff negotiations, the Trump administration hoped that South Korea would join the United States and jointly contain China in areas such as the shipbuilding industry.

The Financial Times mentioned that China announced sanctions against Hanwha Group at a time when the Sino-US trade situation was once again tense.

According to statistics from the Center for Strategic and International Studies (CSIS), a U.S. think tank, South Korea's shipbuilding industry accounts for more than 29% of the global market. As part of U.S. -South Korea trade talks, South Korea has committed to investing $150 billion in the U.S. shipbuilding industry.

South Korea¡¯s Korean Daily that South Korea¡¯s shrimp has been involved in the conflict between Chinese and U.S. giant whales, and sanctioned entities will be forbidden to conduct any trading activities with Chinese organizations or individuals.

On August 26, local time, the naming ceremony of the US national security multi-mission ship "Maine" was held at Hanwha Philadelphia Shipyard (Source: US media)

South Korean media analyzed that the policy for Hanwha Group is different from imposing port fees, but directly targets specific private companies, with a huge impact. The port fee measure affects the entire shipping industry through mutual collection of fees between countries, while sanctions on Hanwha may have a direct impact on individual companies.

But no matter what foreign media, it is not the same to mention the close ties between the Hanwei Group and the United States.

Sending funds, orders, and technology, Hanwha Marine, a shipbuilding giant, is a key part of the United States 'plan to revitalize the shipbuilding industry.

Hanwha Philadelphia Shipyard, which was included in the sanctions list, was acquired by Hanwha Group for US$100 million late last year. The shipyard is regarded as a symbolic project of South Korea-US shipbuilding cooperation, and some people even call it part of the "Make the American Shipbuilding Industry Great Again" plan.

According to the American Broadcasting Corporation (ABC), Hanwha Marine has signed a contract with the U.S. Navy to provide maintenance, repair and overhaul work for U.S. Navy ships, helping the Trump administration's efforts to restore global shipbuilding competitiveness.

Comparatively, Hanoi Ocean said in May that it would withdraw from a joint venture in China.

In December last year, Hanwha Group acquired Philadelphia Shipyard to undertake an order from the US Maritime Administration (MARAD) to build five national security multi-mission vessels.

On August 26, Hanwei Group held a ceremony at the factory to name one of the "Minh State" and also announced a U.S. investment plan, saying it would use the Korean-U.S. leaders meeting as an opportunity to invest $5 billion in the shipyard in Philadelphia.

At the ceremony, South Korean President Lee said, ¡°Just as South Korean companies and workers have created the South Korean shipbuilding miracle, now South Korea and the United States must work together to make the miracle of MASGA a reality.¡±

Hanwei Group Deputy Chairman Kim Dong-san also vowed that Hanwei Group will be a reliable partner in reviving the U.S. shipbuilding industry.

Harvard Naval Shipbuilding Factory

South Korea's "Central Daily" quoted Zhu Zhu, a professor at Qinghai University, as saying that China's inclusion of Hunan's Philadelphia shipyard in the sanctions list is a double strike and linkage measure, which both holds back Trump's plans to revitalize the shipbuilding industry, but also targets Hunan's use of Chinese rare-earth elements in defense products.

The Associated Press quoted Cao Cao, vice president of consultancy firm Reddal, as saying China is sending out signals that it will hit third-country companies that have helped the United States weaken China¡¯s maritime dominance.

Reuters pointed out that measures such as imposing port charges are a counterattack by China on the shipping issue against the United States.

China has begun to impose special charges on ships owned, operated, built or hanging U.S. flag, but ships built by China are exempt from payment.

The Athens-based shipping broker Xclusiv said in a report that this sharp reciprocity restriction has plunged the two countries into a spiral of maritime taxation, potentially affecting global freight flows.

A consultant who advises global companies on trade with China believes that the New Deal may not cause much disruption to the industry, and any cost increases are likely to be absorbed by higher prices.

"What can we do? Stop shipping? Trade with the United States is pretty messy, but businesses are always trying to deal with it," he said.

According to the Ministry of Commerce website, a spokesman for the Ministry of Commerce asked reporters about the 301 investigation restriction measures in the U.S.-China shipbuilding industries.

The U.S. measures are typical unilateral and protectionist acts, seriously violate the WTO rules, violate the principle of equality and reciprocity of the Sino-U.S. Maritime Agreement, give the relevant countries' shipping and shipbuilding enterprises an unfair competitive advantage, constitute a discriminatory practice against China's shipping, shipbuilding and other industries, and seriously harm China's relevant industrial interests.

The spokesman stressed that in order to further safeguard the interests of China's related industries, the relevant Chinese departments, in accordance with relevant regulations, have included some enterprises that assist and support the relevant investigation activities of the United States in the counter-measure list, and launched an investigation on the behaviors of the United States and some countries and enterprises that endanger the safe development interests of China's shipping, shipbuilding and other related industries. During the implementation of the investigation, China will adhere to the principles of openness, fairness and impartiality to carry out law enforcement and investigation, and fully protect the rights of all stakeholders.

China's position on relevant issues is clear, consistent, fighting, accompanying the end; talks and doors are open.China urges the United States to correct its wrong practices, and move forward with China to solve the issues of concerns of the two sides through equal dialogue and consultation.