Editor’s note: This blogpost solely represents the author’s views and does not represent the organization as a whole.
China has quietly but surely become the global leader of the shipbuilding industry. Shipbuilding is crucial for commercial and military purposes, securing the ability for countries to transport critical goods across the world. Beijing not only builds the most ships, it also makes them accessible to potential buyers by financing their acquisition and leasing. This is made possible through a state-backed lending program that has provided at least $10.25 billion in financing over the past two decades to private and public shipping industries in low- and middle-income countries.
Data reveals that China leads the way in shipbuilding. According to a CSIS report in February 2025, China now accounts for 53.39% of global shipbuilding, followed by South Korea (29.1%) and Japan (13.1%) as other top builders.
After the current U.S. administration revealed an Executive Order in early April on strengthening American maritime dominance, just last week the U.S. Trade Representative (USTR) decided to levy fees on Chinese-manufactured and Chinese-flagged vessels docking at U.S. ports, based on the net tonnage of vessels and containers discharged by these ships. The fees are a result of a USTR investigation finding that “China’s targeting the maritime, logistics, and shipbuilding sectors for dominance is unreasonable” and that this “burdens or restricts U.S. commerce.” With these actions, the shipbuilding industry led by China is now poised to drastically change.
China manufactures hundreds of ships each year, but the high upfront cost of these ships poses a major hurdle for many shipping companies and other potential buyers. To overcome this barrier, Beijing leverages official financing to make Chinese-manufactured ships more accessible, offering loans and credit to make these large purchases more feasible.
The following analysis outlines how China directed development finance to low- and middle-income countries from 2000 and 2022 for the acquisition and leasing of vessels. It will outline the financial tools Beijing uses to not only lead in the manufacturing of ships, but also in financing their construction. Finally, it will zoom into a specific case study of how China has supported Russia in successfully acquiring advanced ships.
China’s financing of vessel acquisitions
China has used development finance as a tool to boost its domestic shipbuilding industry by aiding the acquisition, leasing, and chartering of Chinese-made ships to developing countries. Beijing has committed at least $10.25 billion (in constant 2022 USD) in loans and grants to finance ships in 71 instances to 16 low- and middle-income countries from 2000 to 2022, based on data from AidData’s Global Chinese Development Finance Dataset, Version 3.0 and supplemental research into grants and loans for 2022.
To support the acquisition of ships, China preferred loans as its primary financing instrument. 97% of records for financial flows related to shipbuilding and vessel acquisition during this period were loans—with the exception of passenger vessels donated to Micronesia in 2020 and one commercial ferry donated to Kiribati in 2021. China concentrated its financing for ships on Russia, which received a total of $3.2 billion, closely followed by the Marshall Islands.
Instead of recipient governments in low and middle-income countries holding the responsibility for repaying this debt, most of China’s shipbuilding-related financing goes directly to private companies. Less than 14% of this debt is public debt, with the vast majority—over 86% of the total financing extended to support vessels—representing private debt or debt to joint ventures with little to no equity stakes from host governments. This highlights that China’s shipbuilding financing is usually intended to support economically viable companies and projects.
China primarily focuses on financing vessels that are used for maritime commerce—including container vessels that can transport a variety of goods across the world, as well as tankers and liquefied natural gas (LNG) vessels specifically used for energy resource transportation. In total, general cargo and container ships accounted for 40% of Beijing’s financing, followed by 38% for tankers and LNG vessels.
In analyzing China’s state-backed financing of vessels, three key components surface that drive its provision:
- Supporting China’s own domestic shipbuilding industry;
- Directing financing to joint ventures with some level of Chinese firm equity operating abroad; and
- Securing the transportation of critical goods from developing countries to mainland China.
First, China supports its own manufacturing industries by providing credit to borrowers who are buying ships built by Chinese companies. Of the 71 recorded vessel acquisition and leasing transactions, at least 74% included ships produced in China—at shipyards such as Hudong-Zhonghua (8), Yangzhou Dayang (6), and Shanghai Jiangnan-Changxing Shipbuilding (5). As research by CSIS has shown, shipyards such as Hudong-Zhonghua and Shanghai Jiangnan-Changxing are used not only for commercial shipbuilding, with ships leased and sold to foreign countries, but also for the domestic construction of new Chinese military ships.
Second, China often has a direct stake in the ventures it chooses to fund, and it tends to extend funding to support Chinese companies. This is not unique to shipbuilding, as Beijing uses this financial instrument in other critical industries such as transition minerals, as a recent AidData report finds. In the case of China’s vessel financing, 37% is funneled to joint ventures in which the Chinese government has some level of equity stake. Extending financing to joint ventures held in part by Chinese state-owned enterprises allows Beijing to support its own firms looking to expand into markets abroad.
Third, China also directs its state-backed financing to secure access to critical resources, especially energy. All of the projects with some degree of Chinese government ownership—such as vessels in Russia, a floating LNG unit in Mozambique, and tankers in Papua New Guinea—are directly tied to liquefied natural gas, granting China the opportunity to not only to secure access to these resources but also to potentially transport them.
These three features of Chinese lending play a key role in China’s support of vessel financing to Russia—illustrated by a large-scale project between Russia and China to support the extraction and transportation of LNG.
Russia-China partnership in shipbuilding
In Russia, Beijing’s state-backed financing is used to strategically secure the energy resources China needs: liquefied natural gas. Beijing only began to extend financing for shipbuilding to Russia in 2017, when it needed to transport energy from Russia back to China from energy projects there. China then committed almost $3.2 billion in state-backed lending to the country between 2017 and 2019. Its partnership with Russia is a unique example of how China stands to directly benefit from financing extended to support shipbuilding that is also needed to transport critical LNG.
All $3.2 billion in financing from China has centered around the same project: ice-breaking LNG vessels to support Russia’s Yamal LNG Project. Yamal is a massive LNG plant located in Russia’s Arctic port of Sabetta on the Yamal Peninsula in northwest Siberia. Since 2017, the project has reportedly produced 100 million tons of liquefied natural gas. At least $746 million of this financing directly supported the acquisition of ships manufactured at the Hudong-Zhonghua shipyard.
In 2016, China National Petroleum Corporation (CNPC) acquired a 20% stake in the special purpose vehicle “OAO Yamal LNG”—with the Silk Road Fund, a Chinese state-backed investment fund, acquiring a 9.9% stake and Russian OAO Novatek and French Total S.A. holding 50.1% and 20% equity stakes, respectively. In 2016, China Development Bank, China Eximbank, and the Silk Road Fund provided five loans worth almost $14.9 billion to support the acquisition and development of the plant, which would later lead to the production and transportation of LNG—supported by China’s ship acquisition financing.
However, in order to transport the 3 million tons of LNG each year that CNPC agreed to acquire in a 2014 offtake agreement, vessels were needed to move between Russia’s Yamal Peninsula and China via the Northern Sea Route. Subsequently, two LNG shipping vessels for $643 million were purchased in 2017 from Daewoo Shipbuilding & Marine Engineering Co. Ltd., a Korean shipyard, as well as six LNG Arc7 ice-class vessels for $1.83 billion.
In 2019, the latest and largest purchase took place, with the LNG vessels PHECDA, Merak, Megrez, and Dubhe supported by $746 million in Chinese state-backed lending to facilitate the year-round transportation of LNG between Yamal and China. Not only did the financing support the joint venture Arctic Orange LNG Shipping Ltd., which is 50% owned by China COSCO Shipping Corporation Limited, but the four vessels were built by Chinese shipyard Hudong-Zhonghua Shipbuilding (Group) Co., Ltd.—leading to a total of $3.2 billion in Chinese financing extended to Russia for the purpose of shipbuilding.
This case study highlights the often complex ownership and financing structures in vessel acquisition. It shows that China’s financing of shipbuilding in Russia is directly tied to its transportation of energy resources across the Northern Sea Route, which requires ice-breaking vessels to pass through the frozen waters. Not only will the Northern Sea Route be useful for China’s stakes in Yamal, but also for its trade with Europe.
China’s shipbuilding in the future
Although this analysis explores vessel acquisition from 2000 up to only 2022, since then, China has continued its state-directed financing of ships and other maritime vessels. The shipbuilding industry is forecasted to undergo significant changes in the coming years, as the U.S. gears up to devise a Maritime Action Plan to strengthen its domestic shipbuilding industry—through the help of allies like South Korea and Japan—as well as charging Chinese-built and Chinese-flagged ships docking at U.S. ports. These developments may change the way China supports and finances shipbuilding in the future.
This analysis offered a sneak peek into how Beijing has succeeded in becoming the world’s largest shipbuilder. Not only does China produce ships domestically in large quantities at its shipyards, it also regularly helps shipping companies in financing them through loans—and, on rare occasions, grants.
Methodology note
The data in this analysis is drawn from AidData’s Global Chinese Development Finance Dataset, Version 3.0, supplemented by further data collection on grants and loans committed in 2022. All financial commitments are constant 2022 U.S. dollars.
