China’s decision to sanction five U.S. subsidiaries of Hanwha Ocean is sending shock waves through Korea’s shipbuilding industry, fueling fears that Beijing may widen its retaliation against Korean firms that deepen ties with Washington under the Make American Shipbuilding Great Again (MASGA) initiative.
The move comes as tensions mount between Washington and Beijing over trade and security, and industry insiders fear the sanctions could soon target more Korean companies, including HD Hyundai. Observers also warn of potential long-term risks to Chinese orders and disruptions to the global supply chain.
“China views shipbuilding as a national strategic industry,” a senior official in the Korean shipbuilding sector said. “The closer Korean firms get to the United States, the stronger China’s retaliatory measures may become. Beyond technology, companies now need to prepare for geopolitical risk management.”
The Chinese Ministry of Commerce said Tuesday that the sanctions were in response to U.S. trade restrictions under Section 301 of its Trade Act, which target China’s maritime, logistics and shipbuilding sectors. The sanctioned subsidiaries include Hanwha Shipping, Hanwha Philly Shipyard, Hanwha Ocean USA International, Hanwha Shipping Holdings and HS USA Holdings. All transactions, investments and collaborations between these entities and Chinese individuals or companies will be banned.
Hanwha Ocean confirmed awareness of the announcement and said it is “closely reviewing the potential business impact.”
While Beijing claims the five entities cooperated with the U.S. government’s Section 301 investigation, no specific details were disclosed. Chinese media also speculate that Hanwha Ocean may have provided technical documents to U.S. authorities.
Hanwha Ocean has made significant inroads into the U.S. market, acquiring Philadelphia-based Philly Shipyard in late 2024 and pledging a further $5 billion investment this year. The efforts are seen as playing a key role in revitalizing the U.S. shipbuilding industry and strengthening the U.S. Navy’s capabilities.
China’s state-run media have harshly criticized the MASGA project, calling it a “dangerous gamble,” and have voiced growing discomfort over Korea’s increasing alignment with the United States. Analysts say the latest sanctions may not stop with Hanwha.
“These sanctions may signal broader pushback against Korean firms like HD Hyundai entering the U.S. market,” said Yang Jong-seo, a chief researcher at The Export-Import Bank of Korea.
Although the direct sanctions currently apply only to U.S.-based subsidiaries, their effects could ripple through Hanwha Ocean’s Korean headquarters and its affiliates. Industry insiders warn that if China considers Hanwha Ocean’s headquarters a “related entity” to the sanctioned subsidiaries ? or if Chinese state-owned enterprises begin voluntarily cutting ties ? the company’s overall business operations in China could come under significant strain.
Supply chain disruptions also remain a looming concern, as Korean shipbuilders still rely heavily on Chinese-made materials for certain lower-cost components and raw materials.
“China accounts for a large share of parts used in piping, electrical systems and offshore equipment,” said an industry insider. “If Beijing moves to restrict exports to Korea, it could delay production schedules and drive up costs.”
However, the impact may be limited in the short term, as core components have been largely localized, and Korean shipbuilders have diversified their sourcing to include suppliers in the United States, Europe and Southeast Asia.
The incident underscores the growing challenge Korean shipbuilders face as they are increasingly forced to choose sides in the U.S.-China trade rivalry. With China now seeking to curb Washington’s efforts to rebuild its naval power ? and viewing shipbuilding as a core national industry ? the issue could evolve into a broader geopolitical risk.
“Shipbuilding can no longer be seen as a mere industrial sector ? it must be understood as an extension of global security and foreign policy,” said Kim Myung-hyun, a professor of naval architecture and ocean engineering at Pusan National University. “To survive, the government and industry must strengthen not only their technological capabilities, but also their geopolitical awareness and response strategies.”