President Donald Trump’s planned executive order to bolster U.S. shipbuilding acknowledges a hard truth: China is winning the global economic battle, at least in the maritime sector.
The U.S. defeated Japan in the Pacific theater of World War Two in large part because we could pump out new ships faster than the Japanese could sink them. America even flaunted its superior industrial base by launching vessels that served no purpose beyond boosting morale — most famously a floating ice cream factory.
Today, however, our primary global adversary, China, has 200 times the shipbuilding capacity of the United States, giving Beijing a significant advantage in any naval war of attrition.
While the fact sheet accompanying Trump’s E.O. accurately notes that China achieved its “position of dominance in the global market through unfair non-market practices,” this isn’t a simple case of socialism versus capitalism. Unfair or not, it is a very real and serious problem we must acknowledge and confront.
Ironically, American companies have a much harder time building anything than their counterparts in communist China. Not only do American shipyards face much stricter environmental reviews than many foreign competitors, but they also face the one-two punch of expansive regulations and organized labor.
Instead of addressing workplace health and safety concerns through our legal tort system or through collective bargaining with workers, shipbuilding companies (and manufacturers of all stripes) are forced to spend billions — and years — complying with invasive government rules. These in turn create an elevated “floor” that serves as the new starting point for each future labor negotiation.
Neither side in this geo-political contest is abiding by free-market principles. The difference is that while China stimulated its shipbuilding industry with state subsidies, we killed ours with overregulation. Free markets are more effective at solving problems than top-down state control, but not if those markets are choked with government red tape.
This pattern extends to other areas of the economy. The Chinese Communist Party pours billions into subsidizing telecommunications company Huawei, which makes 30% of the world’s 5G network equipment. Its closest U.S. competitor, Cisco, has a market share of roughly 5%. If Huawei takes the lead in transitioning the developing world to 5G, China will reap hundreds of billions of dollars in profit and gain enormous leverage over countries that rely on its technology and equipment.
In a truly free market, new U.S. companies would rise to the challenge of competing with Huawei. Instead – and ironically — the overregulated market we actually have is actively preventing them from doing so.
The Department of Justice Antitrust Division, for example, filed a lawsuit in January designed to block telecommunications company Hewlett Packard Enterprise from acquiring a competitor called Juniper. Together, the two companies would have more resources to challenge Cisco’s domestic market dominance (some Huawei products are banned in the U.S.). But before that can happen — and unless Trump’s Attorney General Pam Bondi intervenes — Hewlett Packard and Juniper will be forced to spend their time and money fighting their own government in court.
Beijing also is pursuing energy security by any means available, including long-term contracts for liquid natural gas imports, increased petroleum refining capacity, solar farms, wind, and hydro. In recent years, China’s Communist Party-controlled government has permitted one to two new coal plants every week (accounting for 95% of global coal plant construction), even as they build as many new nuclear plants as the rest of the world put together.
Making matters worse for us and better for China, former President Joe Biden canceled the Keystone XL pipeline, placed a moratorium on LNG exports, rammed through hundreds of billions of dollars in green energy subsidies (which mostly went to purchase Chinese solar panels and electric vehicle batteries), and sold Beijing oil from our Strategic Petroleum Reserve.
Moreover, thanks to Washington’s draconian environmental regulations and convoluted permitting processes, we haven’t built a coal plant since 2013, and our nuclear power generation has been stagnant for the past quarter century.
The same story keeps repeating itself: China subsidizes while America self-sabotages.
Fortunately, it’s not too late to change course. President Trump has already moved to streamline permitting for new energy projects, and has committed to slashing 10 regulations for every new one his administration creates. He’s also placed tariffs on Chinese goods, signaling that the U.S. will no longer handcuff its own companies while China cheats with theirs.
The bottom line here is that the biggest threat to American economic power isn’t China—it’s our own government’s refusal to let our businesses compete on a level playing field. If we don’t cut the red tape now, we’re handing China the energy future on a silver platter.
Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He served as the United States Attorney in Atlanta from 1986 to 1990 and was an official with the CIA in the 1970s. He currently practices law in Atlanta, Georgia, and serves as President of the National Rifle Association.
