Illustration: Chen Xia/GT

South Korea's offer of a multibillion-dollar shipbuilding investment package in the US, dubbed "Make American Shipbuilding Great Again" (MASGA), has attracted attention in the global shipbuilding industry. 

The MASGA, proposed by South Korea as part of ongoing negotiations to avert steep US tariffs, involves large-scale investments by South Korean private shipbuilders in the US. The package includes capital investment and financial support, such as loans and guarantees backed by South Korean institutions, government sources said on Monday, according to the Yonhap News Agency.

These recent developments, coupled with an earlier report from Nikkei Asia highlighting the increasing frequency of shipbuilding collaboration between South Korean and US companies, paint a picture of advancements in US-South Korea shipbuilding cooperation. Although this partnership is presented as an initiative aimed at revitalizing America's shipyards, it essentially represents a high-stakes bargain, one where Seoul is exchanging its technological expertise and financial investment for lower tariffs, a trade-off that carries uncertain returns and long-term risks.

Given the background of the current trade talks and the August 1 deadline, it is not hard to see why South Korea is pushing for a trade deal by offering the shipbuilding package. South Korea dominates advanced vessel construction, particularly in liquefied natural gas carriers. So Seoul apparently regards it as a bargaining chip in its economic and trade negotiations with Washington, hoping to secure concessions such as lower tariffs.

This approach clearly stems from the belief that geopolitics can overturn economic principles. Essentially, it represents a high-risk gamble on the part of South Korea, particularly in the context of the rapid restructuring of global supply and trade chains. While South Korean shipbuilders are equipped with advanced technology and management experience, the US shipbuilding industry has been in a prolonged state of decline, hampered by critical deficiencies in its supply chain infrastructure and a shortage of skilled workers. 

Addressing these systemic issues requires comprehensive and sustained input over time. Even with substantial investment from South Korea, the practical realities suggest that achieving the goal of revitalizing the US shipbuilding sector remains an arduous and uncertain journey.

For some in South Korea, collaboration with US shipbuilding firms may present development opportunities for South Korean shipbuilders, allowing them to capture a larger share of the global market. However, this partnership could also lead to a precarious situation where South Korea becomes increasingly dependent on, or even subordinate to, US interests. 

But the US, given its priority on its own interests, is likely to seize the lion's share in cooperation while neglecting South Korea's interests. Moreover, this growing dependence could exacerbate the concerning trend of industrial hollowing-out in South Korea, as local shipbuilders may transfer significant portions of their production capacity and skilled engineers to US shipyards. Such a shift could ultimately undermine their competitive edge in the global market.

As for China, there is no denying that its shipbuilders are under certain pressure amid the current geopolitical environment. According to new data from international shipping association BIMCO, China's share of newbuilding contracts dropped from 72 percent to 52 percent in the past six months due to concerns over US port fees. 

However, this pressure has also driven Chinese shipbuilding companies to accelerate technological innovation and industrial upgrading, thereby continuously enhancing their core competitiveness. In recent years, Chinese shipbuilding companies have made remarkable breakthroughs in the fields of green and intelligent ships, developing new products that meet international environmental standards and market demand.

The global ship sector is undergoing profound changes, and the rise of emerging economies has opened up vast development space for Chinese shipbuilders. With increasing trade activity in Southeast Asia, South Asia, and other regions, the demand for various types of ships has surged. 

These emerging markets have high requirements for the cost-effectiveness of ships, and Chinese shipbuilders have clear advantages in cost control, production efficiency, and product quality, enabling them to meet the needs of these markets. By exploring emerging markets, Chinese shipbuilding companies can make up for the losses caused by trade restrictions in some traditional markets and lay a solid foundation for their long-term development.