In the global competitive pattern of the shipbuilding industry, China relies on advanced technology and high-efficiency production capacity, and the share of commercial ship orders exceeds 60%, thanks to long-term industry chain optimization and innovation investment.

The U.S. shipbuilding industry, which accounts for less than 1 percent, faces decline in capacity and technological backwardness, launching a number of revitalization initiatives, including attracting allies to inject funding and technical support.

South Korea, as a U.S. Asia-Pacific partner, is included in the framework by committing to provide $150 billion in financial assistance to the U.S. shipbuilding sector, a cooperation model aimed at helping the U.S. rebuild its domestic shipyards and supply chain systems through ¡°friendly outsourcing.¡±

After the signing of the strategic cooperation agreement on shipbuilding, South Korean enterprises deeply involved in U.S. projects, promoting the transition from pure trade to industry, which is different from the previous U.S. reliance on domestic enterprises, with more emphasis on allied resource integration.

However, this strategy has raised high concern from China, as it directly targets China¡¯s industrial advantages and tries to undermine China¡¯s export competitiveness through investigations and restrictions.

On October 14, 2025, the Ministry of Commerce of China issued an announcement to include five U.S. subsidiaries of South Korea's Huanwei Marine Corporation on the counter-list, including Huanwei Shipping Limited Liability Company, Huanwei Philadelphia Shipyard Company, Huanwei Ocean American International Limited Liability Company, Huanwei Airways Holding Limited Liability Company and HS United States Holding Limited Liability Company.

These subsidiaries are banned from trading, cooperating and other activities with organizations and individuals within China, directly because they assist the U.S. Trade Representative¡¯s Office in carrying out 301 investigations into China¡¯s maritime, logistics and shipbuilding industries, providing data and recommendations, and supporting the U.S. to develop additional port charges against Chinese ships.

As a leading shipbuilding company in South Korea and its U.S. subsidiary¡¯s active participation in the U.S. 301 investigation, HUAWEI Oceans is the result of deepening U.S.-Korea cooperation. At the end of 2024, HUAWEI acquired the U.S. shipyard in Philadelphia for $100 million and announced an additional $5 billion investment to transform it into a U.S.-Korea joint production base with the goal of delivering ten ships within a decade.

This is different from previous South Korean overseas investment projects, mostly decentralized commercial expansion, this time is tightly embedded in the U.S. Indo-Pacific strategy, and even responsible for the maintenance of parts of the U.S. Navy's Seventh Fleet ships, covering 30% of the annual major repair tasks, including maintenance of Alibaba-class destroyer radar systems, directly serving military needs.

Hanwha's move has accelerated the revival of American shipbuilding. By introducing South Korea's advanced welding technology and automated production lines, it is expected to increase the efficiency of American shipyards by 30%, helping the United States shift from relying on imports to local manufacturing, which is more strategic than the simple tariff barriers of the United States in the past.

The U.S.-South Korea Shipbuilding Strategic Cooperation Agreement was signed in 2025. The agreement is clearly aimed at coping with Chinese competition. The US $150 billion in funds promised by the South Korean government will be mainly used for U.S. infrastructure construction and technology transfer. Compared with previous U.S.-South Korea trade negotiations, it pays more attention to the establishment of industrial funds and localization of shipyards.

In the framework of the agreement, Huangwei highlighted cooperation with the United States as a core strategy for the decade, but ignored the importance of the Chinese market, whose revenue in China once accounted for 18% of the global total.

Hanwha's strategy is more offensive, not limited to commercial ships, but also extends to the military field, trying to seize global market share by taking advantage of U.S. momentum. This is different from South Korean companies that maintained neutral cooperation in the past. Now they openly choose sides, exposing themselves to game risks.

The 301 investigation report, submitted by Huawei in U.S. subsidiaries, sent a letter to the U.S. Trade Representative's Office on March 20, 2025, explicitly supporting restrictive measures against China, and providing assessment data on the so-called impact of Chinese subsidies, which directly boosted the U.S. decision-making process.

Compared with traditional investigations under the 1974 Trade Act, Section 301 has been updated to pay more attention to digital evidence and allied intelligence sharing. Hanwha's participation has shortened the investigation cycle, and it took only half a year from initiation to implementation of measures.

This is different from previous U.S. steel tariff actions against China. This measure against the shipbuilding industry is more targeted and aims to cut off China's high-end ship export chain. Hanwha's investment symbolizes the starting point for the United States to rebound from its 1% share, but it also exposes the U.S. technical shortcomings.

Hangzhou¡¯s strategic choice is also reflected in the cutting off with the Chinese market.In May 2025, Hangzhou suddenly withdrew from a joint venture in Shandong, which produced key components of LNG vessels, with a market share of 15% of China¡¯s equivalent.

This behavior differs from previous commercial adjustments, more like an active strategic shift, prioritizing U.S. allies to sacrifice China¡¯s partnership.As a result, Huawei¡¯s LNG ship equipment sales face losses, China¡¯s domestic suppliers quickly fill the gap, through technological iteration increase the autonomy rate, and the domestic component share is expected to rise to 80 percent in 2026.

This is different from the past dependence on imports. This incident has accelerated the optimization of China's supply chain and promoted the transformation from traditional manufacturing to smart green ships. The order delivery cycle has been shortened by 20%.

From a global perspective, the U.S. is using South Korea¡¯s funding and technology to try to reshape the ship pattern, but facing labor shortages and technology bottlenecks.Huawei¡¯s Philadelphia Shipyard Project has hired 1,000 local workers to boost employment growth, but the overall demand for recovery exceeds $150 billion and is just the starting point.

Compared to the previous cooperation between the United States and Japan, this time more attention is paid to military and civilian integration, the radar maintenance project of Hanoi has expanded from mere repair to system upgrading, integrating into the U.S. Indo-Pacific deployment. But China's shipbuilding industry through digital transformation and innovation-driven, the volume of orders in 2025 has increased by 15%, consolidating its leading position.

China has talked to South Korea through diplomatic channels, warning of potential risks, but has not been taken into consideration.This reflects South Korea's economic and security contradiction: shipbuilding exports rely on China as much as 35%, LNG ship equipment sales $12 billion, accounting for 40% of its exports of such products; but the United States is securely bound, participating openly in actions against China.

This strategy of "occupying both ends" is no longer sustainable at a time when the game between China and the United States is intensifying. Hanwha's experience warned other allied companies to avoid getting involved in similar investigations, otherwise they would face the risk of supply chain breakage.

After the announcement of the sanctions, the South Korean media reacted strongly, with some voices calling Huawei the victim of the Sino-U.S. dispute. The head of the South Korean Defense Administration said the move would affect the South-U.S. cooperation project "to make the U.S. shipbuilding industry great again".

The South Korean President's Office responded that the impact was controllable and was communicating with China, but the overall situation showed a lack of confidence. Today, Hanwha's share price fluctuates in the short term, falling by several percentage points, but no further escalation measures have been seen. Chinese local suppliers have accelerated market filling and enhanced industrial autonomy.

This counter-measure incident highlights China's determination to safeguard its core interests, accurately attack entities that help the United States, and at the same time promote the upgrading of local industries. Although Hanwha's 150 billion related investment has promoted the progress of the United States, it has caused backlash due to choosing sides, exposing the vulnerability of third-party companies in the game between great powers.

In the future, South Korea needs to rethink its balance strategy to prevent companies from paying for external pressure. China's shipbuilding industry will continue to consolidate its advantages through innovation and contribute to global trade stability.