China’s cyberattacks on manufacturing sector are part of China’s long-term strategy to achieve industrial dominance

COMMENT: What connects World War II, the planned takeover of US Steel, and China?

All are cautionary tales of how all wars, past, present and future, are won by manufacturing. As the world navigates a complex web of global trade and geopolitical tensions, manufacturing is at the forefront of a new battleground between the United States and China.

The impact of China’s dominance of the shipbuilding market, the increased number of cyberattacks on the sector, and the strategic implications of Nippon Steel’s proposed takeover of US Steel could all be harbingers of a future military confrontation with China.

Here’s why: In World War II, America’s industrial might was key to its victory, transforming the country into the “Arsenal of Democracy.” Today’s scenario, in which manufacturing capabilities are increasingly outsourced or under foreign control, contrasts sharply with that historical power. The United States once led in shipbuilding, but the narrative has now shifted toward concerns about losing its lead in manufacturing, technological innovation, and strategic autonomy.

This shift is a preview of how industrial power will play a role in future conflicts, where economic warfare may precede or parallel military engagement and have a greater impact than steel. This includes chemicals and petrochemicals, as well as machinery and equipment needed for war.

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When the time comes to build ships, tanks, and airplanes, a country that does not control the means of production will lose its strategic advantage for decades.

Production in the spotlight

According to a recent report by Ontinue, the manufacturing industry has seen an increase in cyberattacks. In the first half of the year, 41% of incidents involved the manufacturing industry, a 105% increase compared to 2023. What could be causing this increase?

Other vulnerable sectors, such as IT, have had to fight a long, hard battle to improve their defenses and harden their systems. Cyberattacks are like burglars—the easier the target, the better. By the numbers, manufacturing has become an easier target.

The increase in attacks may also be part of a broader strategy to reduce production of equipment and ammunition needed to establish a war footing. Without production, our adversaries can bring us to our knees. A military attack with kinetic weapons on a production facility would be an act of war. What better way to avoid direct confrontation than using cyberattacks to bring a sector to a complete standstill just before hostilities break out?

China’s Dominance in Shipbuilding

China’s ascent to the top of the global shipbuilding industry is not just a commercial achievement, but a strategic move that underscores its broader geopolitical ambitions. With shipyards accounting for more than 60% of its global order book, China has overtaken traditional leaders like South Korea and paved the way for a maritime domain where its influence could dictate terms. This dominance has been fueled by state subsidies, technological innovation, and a clear military-civilian mix, in which commercial shipbuilding capabilities directly enhance naval strength.

The United States has noticed, and recent actions by the Biden administration signal recognition of this threat. The United States intends to counter it with tariffs and investigations into China’s trade practices.

Proposed acquisition of US Steel by Nippon Steel

Nippon Steel’s proposed takeover of U.S. Steel, which has been delayed until after the November presidential election, has stirred up commotion in U.S. industrial policy circles. If it had gone through, the move would have placed one of America’s iconic steel companies, vital to national security and infrastructure, under foreign control.

While at first glance this may seem like a simple business transaction, it reflects deeper concerns about national security, economic sovereignty and the strategic importance of steel in manufacturing, especially shipbuilding. Critics say it could lead to a dependence on foreign steel, potentially weakening America’s industrial base, recalling the self-sufficiency that was a cornerstone of its industrial power in World War II.

The deal has drawn opposition from both the White House and U.S. lawmakers across party lines, citing concerns about national security, supply chains and the impact on American workers. President Biden is reportedly poised to block the takeover, reflecting significant political resistance to the deal.

Potential for armed conflict

The intertwining of economic power with military strategy is nothing new. Nevertheless, the scale and nature of today’s global economy add layers of complexity. China’s shipbuilding capabilities, combined with its strategic interests in the South China Sea and beyond, point to broader ambitions that could lead to military confrontations. The United States, recognizing the strategic importance of maintaining a competitive edge in manufacturing, especially in key sectors such as steel and shipbuilding, has responded not only with economic means but also with a reassessment of its military strategies in the Indo-Pacific.

Discussions range from the technological espionage risk posed by Chinese equipment in U.S. ports to the broader implications of China’s manufacturing dominance for global security. Further reports underscore a growing public awareness of the strategic implications of economic dependence, reflecting concerns about a scenario in which economic warfare could turn into military conflict.

The interplay between China’s leadership in shipbuilding, its strategic acquisition of U.S. Steel, and historical lessons from the World War II industry could paint a complex picture of where global manufacturing could be headed. While not an immediate call to arms, these events signal a shift toward a more contested industrial landscape, one in which economic strategies are as important as military ones.

Territorial disputes and the links between global trade and manufacturing supremacy create the potential for conflict. As nations like the US strengthen their industrial policies, the world watches, aware that battles over steel, ships and cyberspace could precede the next major conflict. Strategic sectors like manufacturing, which enable modern warfare and are constantly under threat from cyberattacks, are most at risk.

Morgan Wright, Chief Security Advisor, SentinelOne

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