Abstract
This chapter examines the rapid expansion and modernization of the People’s Liberation Army Navy (PLAN) through a theoretical framework in political economy centered on the interaction of power, institutions, and interests within the Chinese regime. I argue that China’s naval shipbuilding surge over the past two decades cannot be understood as a purely military or technological phenomenon. Instead, it is deeply embedded in the political-economic structures of China’s authoritarian system and its long-term ambition to reshape the international maritime order.
First, at the level of power, the paper contends that naval modernization has become a core instrument of China’s pursuit of global maritime power and a key symbol of regime legitimacy and great-power status. Highly centralized, top-down decision-making enables the Chinese leadership to rapidly mobilize resources, reprioritize military development, and elevate naval construction to a strategic centerpiece of national power competition, particularly vis-à-vis the United States.
Second, from an institutional perspective, the study highlights the tightly integrated command and coordination mechanisms linking the Central Military Commission (CMC), the State Council, defense-industrial authorities, and local governments. Legal frameworks such as the National Defense Law, the 14th Five-Year Plan, and the strategy of Military-Civil Fusion (MCF) facilitate the systematic conversion of civilian shipbuilding capacity into military production, ensuring continuity, scale, and speed in naval construction.
Third, in terms of interests, the chapter identifies a multi-layered interest coalition encompassing central authorities, state-owned shipbuilding enterprises, and local governments. Monopoly control over technology, capacity, and policy resources—combined with local incentives related to employment, fiscal revenue, and political performance—has made naval shipbuilding both a military priority and a driver of regional economic development. This model, however, also generates structural risks, including resource misallocation, fiscal strain, stalled state-owned enterprise reform, and the danger of strategic overexpansion.
Last, the chapter concludes that while this power-institution-interest nexus has enabled China’s rapid naval rise, its long-term sustainability depends on Beijing’s ability to balance strategic ambition with structural constraints. For the United States and its allies, the PLAN’s growth underscores the need to accelerate maritime rebalancing in the Indo-Pacific and to address the security implications of China’s military-civil fusion and supply-chain autonomy.
Keywords: Political Economy, The People’s Liberation Army Navy (PLAN), Naval Modernization, Military-Civil Fusion (MCF), Indo-Pacifi