OECD shipbuilding economies under pressure as China reshapes global competition

Shipbuilding underpins global trade, with more than 80% of goods transported by sea. Its linkages to broader manufacturing capabilities and national security make it a sector of strategic importance across OECD economies. But maintaining competitiveness has become increasingly difficult in the face of intensifying competition from China. 

Over the past two decades, OECD shipbuilding industries have seen their market share decline sharply, resulting in yard closures and job losses. The European Union’s (EU) share of global deliveries, measured in compensated gross tonnage (CGT), fell from over 20% in 2000 to about 10% by 2007, and has since dropped to 4–5%, with widespread yard closures across Germany, the United Kingdom and the Nordic countries. 

The pattern extends beyond Europe. In Japan, production has consolidated into fewer shipbuilders, with sectoral employment declining from roughly 250 000 in the 1980s to about 71 000 in 2024. Korea, the largest shipbuilding economy within the OECD and the second largest globally, has experienced recurring financial crises among its three largest shipbuilders, leading to periodic restructuring and layoffs. In the United States, the number of active commercial shipyards has declined by more than 70% since 1975, with the loss of over 70 000 jobs.

In recent years, Chinese shipyards have secured a growing share of the global shipbuilding market, supported by lower labour costs and government support. In 2025, China accounted for more than half of global ship deliveries measured in CGT, well ahead of the next largest shipbuilding economies, Korea and Japan. More than two-thirds of China’s shipbuilding deliveries in CGT in 2025 were destined to foreign owners, underscoring the extent to which this capacity serves global, not just domestic, demand.

A recent OECD analysis of 1 777 ship orders placed between January 2020 and December 2024 reveals a persistent price differential in favour of Chinese‑built vessels across market segments. For intermediate-size containerships (7–9k Twenty-foot Equivalent Unit), prices for Chinese-built ships are nearly 10% lower than those from other major shipbuilding economies. For the largest product tankers (110–120k deadweight tonnage), the gap widens to around 14%.  And in higher‑value segments such as liquefied natural gas (LNG) carriers, Chinese shipyards have maintained an average price advantage of around 5% over the past four years.

China’s manufacturing labour costs remain significantly lower than those of other major shipbuilding economies. Average earnings in China’s manufacturing sector are more than three times lower than in Korea and nearly twice as low as in Japan. Although this gap has narrowed markedly since the early 2000s, when labour costs in China were roughly 20 times lower, they continue to exert competitive pressure on OECD shipbuilding economies.

These cost advantages are reinforced by government support to the industry and its suppliers. New analysis from the OECD MAGIC database of industrial subsidies indicates that the total subsidies (grants, income tax concessions and below-market borrowings) to the global shipbuilding sector exceeded USD 1.5 billion in 2023 and 2024, up from USD 1.37 billion in 2022. In 2024, Chinese companies accounted for USD 1.3 billion, representing 84% of total subsidies to the sector.  

Subsidies to Chinese firms amounted to approximately 2.5% of their revenues in 2024, in line with their 2010-2024 average. By contrast, firms from OECD economies received subsidies equivalent to around 0.2% of their revenues in 2024, below their long-term average of 0.4%.  

Over the 2010-2024 period, total subsidies to the sector reached USD 25.6 billion. Of this amount, USD 21.3 billion was allocated to Chinese firms, compared to around USD 4 billion to firms in the rest of the world. 

Public support also extends upstream: the OECD Steel Outlook 2026 showed that China's steel subsidisation rate, measured as a share of firm revenues, is fifteen times higher than that of OECD countries.

In response to these competitive pressures, many shipyards in OECD economies have progressively reoriented production towards high-value niche segments, such as LNG carriers, cruise ships, offshore energy platforms, and luxury yachts. In these segments, advanced technology, customisation, and stringent safety requirements play a decisive role, reducing the relative importance of pure price competition. This shift is particularly evident in the European Union, where production has become increasingly concentrated in specialised segments, most notably cruise ships, which have accounted, on average, for around 65% of total shipbuilding deliveries measured in CGT over the past decade. 

While this restructuring has allowed these economies to retain specialised capabilities and segments of skilled employment, the longer-term sustainability of their competitive position remains uncertain. China's shipbuilding industry has progressively diversified its production mix, reducing reliance on conventional vessel types, such as bulkers, containerships, and tankers, while strengthening its position in higher-value segments including gas carriers and entering new ones like large cruise ships. China has also emerged as a leading supplier of alternative‑fuelled vessels, securing 68.5% of orders in 2024. The competitive pressures that reshaped conventional shipbuilding segments are now extending into niche markets.

The outlook for OECD shipbuilding economies remains challenging. China’s structural cost advantages, though narrowing, remain substantial, and extensive government support shows no sign of abating. These competitive pressures are compounded by broader industry challenges: market volatility, structural overcapacity, the imperative of technological upgrading and growing geopolitical uncertainty. 

In this context, the OECD Shipbuilding Committee provides the only dedicated international platform for co-operation among shipbuilding economies, working to address shared challenges and promote fair and open competition. For governments, the stakes extend well beyond shipbuilding. In an era of rising economic security concerns, how they respond will have lasting implications for their industrial competitiveness and strategic autonomy.