Chinese sanctions will cost a South Korean shipbuilder but could boost US ties

China’s sanctions on Hanwha Ocean will drive up the firm’s costs in the medium term but may also end up boosting South Korean ties with the US over the long term as Washington seeks to expand naval shipbuilding capacity, analysts said.

Last week, the Chinese commerce ministry announced it had imposed sanctions on five US-based affiliates of Hanwha Ocean, one of South Korea’s largest shipbuilding companies.

The ministry alleged that Hanwha had supported Washington’s investigation into Chinese competitors and the ensuing imposition of new port fees.

Hanwha Shipping, Hanwha Philly Shipyard, Hanwha Ocean USA International, Hanwha Shipping Holdings, and HS USA Holdings Corp are all barred from engaging in transactions, cooperation or any other activities with Chinese entities or individuals.

Seoul has touted Philly Shipyard in Philadelphia, acquired last year by the Hanwha Group in a US$100 million deal, as a symbol of the “Masga” (Make American Shipbuilding Great Again) initiative. South Korean President Lee Jae-myung visited the site in August.

South Korean President Lee Jae-myung marks Armed Forces Day in Gyeryong on October 1. Photo: EPA

The initiative is a shipbuilding cooperation project between Washington and Seoul that could total US$150 billion to help revitalise the American shipbuilding industry through South Korean investment, according to Seoul.

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