Third Way: Chinese Theft of Maritime Technology and the New Naval Arms Race

In a Ukrainian boardroom in 1998, Chinese businessman and former People’s Liberation Army (PLA) basketball player Xu Zengping was in the process of closing a major deal with the state-owned Nikolayev South Shipyard. Plying business negotiators with erguotou, a sixty-two proof Chinese white liquor, the army athlete turned entrepreneur was passionately imploring the shipyard to sell their unfinished ex-Soviet Kuznetsov-class aircraft carrier to him so that he could ostensibly convert the vessel into a floating casino catering to China’s growing upper-class. When the half drunk Ukrainian officials overseeing the near-bankrupt state agency finally approved the sale for $20 million, little did they know that they had just turned over a significant military asset to a covert agent acting on behalf of China’s naval services, and that fourteen years later the same decaying hulk would become the Liaoning, China’s first aircraft carrier.

The commissioning of the Liaoning in 2012 and of a second aircraft carrier in 2018 underscores Beijing’s recent shift towards its naval capabilities in general and its acquisition of blue water (i.e., ocean going) maritime assets in particular. With overseas trade representing nearly 40 percent of the country’s GDP and largely responsible for the country’s explosive growth in the Twenty-First Century, securing China’s trade routes and the defensibility of its coastline has taken on newfound importance, as seen with the country’s push to colonize its artificially built islands in the South China Sea. Furthermore, with China’s slow expansion overseas and systematic commercial conquest of the world’s last largely undeveloped post-colonial frontier, officials in Beijing correctly realize that sea-power is essential to their newly defined national interests.

Since the early 2000s, China has invested substantial resources into building up their naval assets, with Chinese ships now outnumbering American vessels by a near 2:1 ratio. However, despite the quantitative buildup, the PLA Navy still lags far behind its U.S. counterpart in terms of training and quality. Indeed, while the U.S. may possess less vessels, those in its armada are much larger with the gross tonnage of its ships - estimated at over three million tons of displacement - dwarfing that of China and of any other potential rival. Furthermore, with the U.S. Navy having taken part in many wars, from Vietnam (1960s) to the Gulf War (1991) to the ongoing Syrian Civil War, the U.S. Navy has had substantial time to hone naval tactics and has developed expertise that make the American Navy the unquestioned leader on the high-seas. However, most important to the comparative analysis is the American quantitative preponderance in capital ships, specifically its eleven aircraft carriers, which are vastly superior in quality to any in China’s arsenal and represent the U.S. military and financial (each is estimated to cost $500 million a year to operate) commitment to naval supremacy.

With China’s heavy dependence on overseas trade and the U.S.’s naval preponderance, American maritime military strategy against Beijing in a limited aims conflict (e.g., hostility against Taiwan) would likely consist of a concerted naval blockade aimed at choking the country’s trade. Indeed, this strategy would prove advantageous to pursue for two geo-strategic reasons. First, despite possessing a formidable coastline that stretches nearly 10,000 miles, Chinese trade is boxed in by what is known as the “first-island chain,” a string of islands stretching from Japan to Taiwan and the Philippine archipelago down to the islands of Indonesia. Punctuated by a limited number of important international straits (e.g., Malacca), a blockade by the 7th Fleet and other contingents of the U.S. navy could concentrate on key areas, thereby negating the quantitative advantage of both China’s Navy and their substantial merchant fleet (now the second largest in the world). Second, the first-island chain is made up of four sovereign nations that are either declared U.S. allies or in ongoing maritime disputes with China, and each of which would likely assist the U.S. in a conflict that would determine the future of Indo-Pacific naval supremacy.

The threat that U.S. naval power presents to China in this scenario has led the country to attempt to balance the scales with the acquisition of advanced offensive naval technology. As with most technological breakthroughs by China in the past decade, many of the acquisitions have been through illicit means. Most recently in early March 2019, Chinese hackers affiliated with Beijing were reported by the Wall Street Journal to have hacked into over two dozen universities across the U.S., Canada and Southeast Asia in an attempt to steal maritime technology. This attempt, like an early more successful breach in June 2018 targeted research and development in submarine missiles and underwater warfare technology as a means to improve China’s submarine arsenal as a counterbalance to America’s quantitive lead in capital ships. By acquiring this technology and integrating it within their existing arsenal, China’s goal is to create adequate asymmetrical naval capabilities that would deny U.S. access to waters around the Chinese coastline (i.e., by making it too costly to intervene) and thereby limit America’s effectiveness at blocking its trade.

Indeed, the Chinese naval buildup, while broad in all categories, has focused primarily on submarines and Beijing is soon poised to command the largest active submarine fleet at over seventy vessels. Along with missiles and other surface launched non-naval assets (including China’s revolutionary electromagnetic railgun), submarines are recognized as being the deadliest threat to capital ships, able to pass undetected through the various layers of screening ships before delivering a fatal blow via torpedo to the carrier group’s most important asset. Submarines are so deadly, that even in times of peace NATO navies have had to closely monitor the forays of Russian submarines, which have become increasingly more frequent since the latter’s involvement in the Syrian Civil War. While China’s submarines may not be as stealthy as many in Beijing would hope, by consistently targeting Western research facilities in order to illicitly advance their undersea technology, China intends to improve their submarine capabilities in order to pose a direct threat to whatever capital ship assets may be deployed.

In response to China’s submarine developments, the U.S. has also been engaging in a modernizing arms race. Having introduced the new Gerald R. Ford-class aircraft carrier and the new Zumwalt-class stealth destroyer which emphasizes anti-submarine warfare, the U.S.’s new vessels are intended to directly confront the new threat of an expanded Chinese submarine fleet. However, with the growing threat posed by cyber warfare, American interests demand further safeguards against efforts to hack its research contributors (both public and private) and a renewed emphasis on anti-submarine technology. As such, a new naval arms race against the world’s two leading powers has begun and threatens to lead to serious confrontation that could change the way maritime access is understood in the South China Sea.