Today: Why is China building so many ships? Brian Hart on its plan to turn overwhelming commercial advantage into military power.

+ Is anyone actually winning in Ukraine? What we’re tracking for this week’s member’s despatch. & New music from Ólafur Arnalds x Talos …

Red sea

Skilled workers—welders, riveters, draftsmen, electricians—transform two-dimensional designs into complex hull curves, maneuver vast steel plates into position, and work in cramped quarters. For centuries, shipyards like Harland & Wolff marked a vessel’s completion with a ceremony. A child or dignitary would screw in the final, silver rivet.

That was then. Today, shipbuilding in the U.S. and Europe is disenchanted. The United States’ share of the global commercial shipbuilding market now stands at 0.1 percent. Europe’s is 7 percent. Between 2019 and 2021, the value of Europe’s orders dropped by 78 percent.

Meanwhile, China has taken control. More than 300 shipyards line the Chinese coast. The U.S. built five large merchant vessels in 2024; in China, a single company, the China State Shipbuilding Corporation (CSSC), turned out more than 250 ships.

Beijing is leveraging this dominance, too. The same shipyards build both commercial and military vessels, so any country sending an order for a ship is also sending money and technology to the People’s Liberation Army.

How did this happen?

Brian Hart is the deputy director of the China Power Project at the Center for Strategic and International Studies in Washington and the co-author of the recent report Ship Wars: Confronting China’s Dual-Use Shipbuilding Empire. Hart says the transformation of the industry began two decades ago, when Beijing decided that it wanted to develop its domestic production capacity—and dedicated a lot of government funding to make it happen. And in the process, the state tore down the firewall that other countries long kept in place between the commercial and military production of ships—a move that’s saved money and brought cutting-edge know-how into China’s armed forces.

The fate of shipbuilding, Hart says, is the latest variation on a familiar theme: Over the past few decades, the U.S. and European economies shifted toward service industries while manufacturing moved abroad—and here, as in many cases, China wound up as the new dominant actor in a global market. Beijing’s leading position in the field carries important economic benefits, but leaders in the U.S., Europe, and Asia are worried about what it all means for national security. If there’s ever a war between China and the U.S. or the broader West, only one side has the capability to ramp up the production of fighting ships quickly and at scale …

Welcome to the machine

With video of the operation available everywhere on social media in the days since, it’s a major, spectacular success for Kyiv—and a profound embarrassment for the Kremlin.

But how much difference did it make? Just two days later, Russia launched a ballistic missile and 103 drones at targets throughout Ukraine. Overnight on Thursday, Russian bombs demolished the state administration building in the major Ukrainian port city of Kherson.

Russia still has another 80 strategic bombers like the ones destroyed on Sunday. This year, Russian armed forces have detonated more than 27,000 bombs and more than 20,000 drones in Ukraine—much higher numbers than in the first half of last year. And Ukraine’s stunning drone operation didn’t alter positions on the war’s front line by an inch.

So what’s the actual state of the war?

This special edition features conversations with Félix Maradiaga, Farida Nabourema, Roger Huang, and Justin Callais—on what financial repression is, how dissidents are using Bitcoin, why countries around the world are developing their own digital currencies, and what financial repression in the autocratic world has to do with financial freedom in democracies.

• Russia strikes back. Overnight on Monday, Russia launched its largest air attack on Ukraine yet, sending about 480 drones and 20 missiles. The raid targeted sites throughout the country and killed one person, according to Ukrainian officials. It’s the third time in June that Moscow has fired more than 400 aerial weapons at Ukraine in a single day, as the Kremlin escalates its military operations—and the two sides appear still to have made no progress on peace talks. … See Michael Bluhm, “Welcome to the machine.”
• Immigration on the ballot in Italy. Few Italian voters turned out on Sunday for a referendum that would have made it easier for immigrants to become citizens by cutting the number of years of residency required for citizenship from 10 to five. Prime Minister Giorgia Meloni and her conservative coalition opposed the measure; they encouraged voters to stay home; and turnout was about 30 percent—well below the 50 percent needed for the results to be binding.
• Labor protest in Iran. A nationwide truck drivers’ strike in Iran is beginning its third week, with drivers in more than 160 cities taking part, according to an Iranian human-rights group. Drivers are protesting against growing economic pressures on their livelihoods—and the government’s refusal to meet their demands for better conditions, in one of the largest episodes of political unrest in years. Iranian authorities have arrested at least 40 truck drivers and their supporters, and an array of labor unions, civil-society groups, and dissidents have publicly expressed support for the truckers.
• Meanwhile. Riots in Los Angeles test the limits of American presidential power. … U.S. President Donald Trump bans travel to the U.S. for citizens of 12 countries. … The Colombian presidential candidate Miguel Uribe Turbay was shot by a 15-year-old and might not survive. … Canadian Prime Minister Mark Carney says his country will boost defense spending and reduce ties with the U.S. …& Sly Stone passes on.

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