Port fees targeting Chinese ships will do US no good

The U.S. controversial measures targeting China's maritime, logistics, and shipbuilding sectors have stoked concern that these protectionist, discriminatory and non-market practices will further disrupt the global economic and trade order.

The Office of the United States Trade Representative announced last week "applicable fees" to be charged on vessels owned, operated, or built by Chinese companies and other relevant measures in a move aimed at "restoring" America's shipbuilding.

But analysts say the U.S. actions, instead of rendering any help to revive the sectors, will do no good to America's broad commercial interests, given their significant negative implications for global trade, supply chain stability, shipping costs, jobs and inflation.

Unreasonable move 

The United States has acted to reverse what it claims is China's "dominance" in the maritime, logistics, and shipbuilding sectors, alleging that such a "dominance" burdens or restricts U.S. commerce. However, experts have pointed out factual inaccuracies in this unreasonable U.S. action.

Firstly, there is no direct causal link between the decline of U.S. shipbuilding and China's development in this sector, said Song Meixian, associate professor of Dalian Maritime University, citing a U.S. Congressional Research Service report.

According to Song, the decline of the U.S. shipbuilding industry began long ago, with its global market share falling to 5 percent in the 1980s from more than 50 percent in the 1960s. Meanwhile, the rise of China's shipbuilding industry only started in the 1990s.

Secondly, by pointing the finger at China and alleging China's "dominance" in these sectors, the United States also ignores the fact that the Chinese commercial fleet accounts for less than 19 percent of the global market share, Song said.

The China Association of the National Shipbuilding Industry said China's shipbuilding industry adheres to the development principles of open competition and mutual benefit, earning the trust of global shipowners through innovation and collaboration. It attributed the decline of the U.S. shipbuilding industry to its own protectionism policies.

Peking University professor Zhao Hong explained that protectionist measures dating back to the 1920s in the United States such as mandating the use of U.S.-built and U.S.-flagged ships for domestic maritime transportation have driven up transportation costs, led to higher prices for equipment and raw materials, and sent shipbuilding costs in U.S. shipyards soaring.

Zhao further argued that the decline of the U.S. shipping and shipbuilding industry stems from multiple factors, including economic financialization, the lack of a complete supply chain, labor shortages, high costs and excessive protectionism.

Negative domino effect 

Experts warn that the port fees will inevitably increase the overall cost of shipping goods to U.S. ports and cause disruptions in the U.S. logistics network, setting off a chain reaction with negative consequences for the U.S. economy.

Chen Jihong, dean of Shenzhen International Maritime Institute, said importers and retailers, in particular, will face increased costs due to higher import expenses. At the same time, consumers may see higher prices for goods. This, in turn, will lead to a drop in retail sales amid declining consumer spending.

"Inflationary pressures are at about 40-year highs in the United States. Imposing the port charges will certainly lead to more uncontrollable prices and inflationary pressures in the country," Chen said.

Shipping costs are a significant driver of inflation. When freight rates double, inflation rises by 0.7 percentage points, said Zhao Nan, vice executive secretary of Shanghai International Shipping Institute, citing an International Monetary Fund analysis.

Zhao added that the U.S. measures could weaken the competitiveness of U.S. export goods and impact industrial development. Chen agreed, warning that the actions may result in reduced trade, including a potential drop in U.S. exports of key agricultural products as shipping costs rise.

With the pending fee charges, Chen also cautioned about declining overall business volume at U.S. ports. "It should be pointed out that port operations are a crucial part of the U.S. economy and serve as pillar industries in certain regions. Any decline in port activity will directly impact port workers' employment, and negatively affect the income of many businesses involved in trade, particularly export-oriented businesses."

Strong opposition 

Jin Ming, an associate researcher at the China Waterborne Transport Research Institute, said the U.S. measures have provoked strong opposition from the global shipping industry due to the disruption they will cause to global supply chain, shipping and trade.

According to the World Shipping Council, the U.S. measures effectively constitute a disguised tax. The Chinese commerce ministry said the U.S. measures harm the legitimate rights and interests of Chinese enterprises, disrupt the stability of the global industrial and supply chains, violate WTO rules, and undermine the rules-based multilateral trading system and international economic and trade order. It called on the U.S. side to stop "blame-shifting" and correct its wrong practices as soon as possible.

"The artificial supply chain segregation by the United States runs counter to the concept of global free trade, and the resulting crisis and consequences are nothing but chaos to the global supply chain system due to the U.S. logistics barrier," Chen said.

The China Association of the National Shipbuilding Industry has urged the domestic industry to unite and work with global partners to promote the sustained and healthy development of the global maritime industry, calling on the global maritime industry to resist the short-sighted U.S. actions and maintain a fair market environment.

Condemning the United States for abusing protectionist policies that disrupt the global shipping market, the China Shipowners' Association stated that Chinese shipowners have strictly adhered to international trade rules, providing stable and reliable logistics services for the import and export trade of various countries, including the United States.

The association called on the United States to cease its actions based on political prejudice, emphasizing its commitment to upholding a spirit of openness and cooperation. It expressed a willingness to engage in dialogue with all relevant parties, including the United States, to safeguard the sustainable development and prosperity of the global economy and trade.