In a move that has angered Beijing, the US has blacklisted China’s largest shipping company, Cosco, along with two major shipbuilding companies, citing their alleged ties to the Chinese armed forces, or People’s Liberation Army (PLA).
At the center of the dispute is Cosco Shipping Holdings Co, a shipping giant now on the US blacklist.
The sanctions blacklist extends beyond shipping companies to China’s technology and energy sectors, with major names such as Tencent Holdings, Contemporary Amperex Technology and state-owned oil company Cnooc Ltd in Washington’s sights.
Cosco and Cnooc are no strangers to US sanctions. In 2019, Cosco faced sanctions for transporting Iranian oil, although these were lifted in 2020.
Maritime arm of the Chinese Armed Forces
Meanwhile, Cnooc, among the first Chinese state-owned enterprises to be sanctioned by Washington, was blacklisted by the Pentagon in 2021.
A 2020 report by the Center for Strategic and International Studies labeled Cosco as the “maritime supply arm of the Chinese Armed Forces,” highlighting its logistical support for China’s Navy operations in the Gulf of Aden since 2008.
While the blacklist does not impose direct sanctions, it serves as a deterrent for American businesses, discouraging partnerships with these Chinese companies and escalating the ongoing geopolitical rivalry. Interestingly, Cnooc still maintains a presence in US energy projects, with shale and deepwater ventures, as well as exploration in the Gulf of Mexico.
China’s Shadow Fleet
This move signals a broader focus on maritime transport and shipbuilding amid growing concerns about China’s maritime militia, often referred to as a “shadow force or shadow fleet.”
The strategic use of civilian fleets with military support has heightened tensions, placing China firmly under U.S. control as it builds up its covert naval capabilities.
With these developments coinciding with Donald Trump’s return to the White House, the U.S.-China maritime rivalry is escalating further.
The Trojan Horse
These recent actions signal heightened US vigilance against China’s strategy of political-military power fusion.
In August 2024, Cosco’s massive 366-meter-long container ship Sakura caused alarm as it sailed out of Norfolk, Virginia, passing alarmingly close to the area’s Naval Station, the world’s largest naval base, home to critical US military assets such as nuclear submarines and aircraft carriers.
This ship, capable of carrying over 14,000 containers, is owned by Cosco Shipping. It was built in 2018 at Jiangnan Shipyard, the same facility responsible for building China’s warships and China’s latest aircraft carrier, the Fujian.
Sakura embodies China’s policy of civil-military fusion.
With 144 cruise missiles and 252 drones, it would blow up the largest US naval base
If, say, just 10% of those containers were used for ammunition, they could, for example, launch 144 cruise missiles and 252 quadcopters, more than enough to destroy every warship in Norfolk and reach land targets far beyond Washington.
This scenario underscores growing concerns about China’s civil-military fusion, which is systematically integrating civilian assets into military operations.
COSCO Shipping, part of the state-owned COSCO Group, is a prime example of this strategy.
As one of the world’s largest shipping companies, it works closely with the Chinese armed forces, regularly supporting naval operations and logistics.
A December 2024 report by the China Maritime Studies Institute at the U.S. Naval War College titled “China Maritime Report No. 43: Shadow Force, A Look Inside the PLA Navy Reserve” sheds light on this growing concern.
According to the report, the People’s Liberation Army (PLA)’s maritime “Reserve Force” consists of two main components: the PLA Navy Reserve and the Maritime Militia. Together, they serve as strategic assets, enhancing China’s naval reach and operational flexibility.
This reserve force allows Beijing to extend its maritime influence and sustain long-term naval operations, effectively enhancing its power projection on the world stage.
A) China’s Navy Reserve
It remains a largely unknown aspect of China’s maritime strategy, but is considered a critical element in enhancing its naval operations.
While not as visible as the People’s Liberation Army Navy (PLAN), this reserve force is designed to augment and support the PLAN in furthering the country’s strategic maritime objectives.
It is largely composed of military veterans, giving it a depth of operational capability. This veteran composition ensures that the reserve can quickly mobilize specialized personnel for missions when necessary.
The reservists are distinguished by their unique role and appearance as they wear Navy uniforms when on duty, symbolizing their integration into China’s naval strategy.
Although an integral part of China’s naval operations, the reserve has not yet been seen directly involved in actual military operations. Instead, its role is primarily complementary, acting as a force multiplier for active personnel and as a flexible strategic asset for a variety of missions.
B) Maritime Militia
In 2021, the Chinese Navy’s amphibious unit conducted a series of amphibious exercises using a 10,000-ton ferry.
This marked a significant shift from the smaller civilian vessels used in the past, according to China Central Television (CCTV).
Observers noted that this change enhances Beijing’s ability to transport large numbers of troops for amphibious operations, signaling a new approach to military logistics.
The People’s Armed Forces Maritime Militia (PAFMM) is a crucial element of China’s “gray zone” strategy, operating in the space between peace and war.
The ambiguous status of the militia, with its lack of formal weapons, gives China the flexibility to either deny or take responsibility for its actions, depending on the political or military context.
This dual-use strategy allows China to assert its maritime claims while maintaining a plausible deniability. For years, the Chinese Armed Forces have made clear their intention to use merchant shipping in a potential invasion of Taiwan through the straits.
This tactic is part of a broader strategy that has raised concerns in the United States, which believes that China’s naval militia is violating international law, particularly in its enforcement of illegal maritime claims.
However, the militia’s scope could extend far beyond Taiwan and the South China Sea.
China’s naval militia has garnered significant attention over the past decade, particularly for its role in supporting China’s territorial claims in the South China Sea and the East China Sea.
Research has shown that civilian vessels are increasingly being used to project military power beyond East Asia, with the militia’s vast fleet of fishing vessels serving as China’s eyes and ears in a vast maritime theater.
Dominating the Seas Through Industry
China’s maritime influence extends far beyond military capability.
The country has established an iron grip on global shipping infrastructure, controlling seven of the world’s 10 most important ports and producing over 95% of the world’s shipping containers.
This industrial dominance, combined with recent moves to restrict drone component exports to the US and Europe, demonstrates China’s growing leverage over global supply chains.
With 90% of global trade traveling by sea, China’s maritime strategy has placed the country at the heart of global commerce.
The combination of industrial strength, military capability, and strategic ambiguity has created a maritime power.
As tensions escalate and with the imminent return of President-elect Donald Trump to the White House, the maritime competition between the US and China is set to intensify further.
