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News Flash: China's Third Aircraft Carrier Could Be Nuclear

China's first aircraft carrier, the Liaoning (PLAN CV-16). Source: Google Earth

China has an aircraft carrier.

In fact, multiple media sources confirm that China has already begun work on its second aircraft carrier, a sister ship to the Liaoning (PLAN CV-16), and likely to be designated CV-17.

What's more, People's Liberation Army Major General Luo Yuan has publicly stated that China's People's Liberation Army-Navy (PLAN) needs three aircraft carriers at a minimum, just to maintain parity with its neighbors. As the general explained: "India will have three aircraft carriers by 2014 and Japan will have three carriers by 2014, so I think the number (for China) should not be less than three." So it should come as no great surprise when we learn that China's race to build a blue water navy is now rounding the corner and heading for a third carrier build.

But here's something that may surprise you: This third Chinese carrier will probably be nuclear -- a 100,000-ton monster of a warship, equal in size, and perhaps in capability, to the Nimitz and Ford-class nuclear aircraft carriers built by Huntington Ingalls (NYSE: HII  ) .

USS Nimitz (CVN-68) at sea. Photo: Wikimedia Commons

What does this news mean to America's military, to Huntington Ingalls, and to investors in Huntington and other defense contractors? Read on, and we'll lay it all out for you.

Welcome to the (nuclear) carrier club
Currently, 12 countries around the world possess aircraft carriers. (The exact number depends on what exactly you think constitutes an "aircraft carrier." For example, Japan's helicopter destroyer class of warship is only capable of carrying helicopters -- but China considers them aircraft carriers nonetheless). But so far, the only nuclear-powered aircraft carriers in the world, are those built by Huntington Ingalls for America.

Japan Maritime Self-Defense Force helicopter destroyer JS Hyuga (DDH 181). Photo: Wikimedia Commons

This gives the U.S. Navy a big advantage over its potential rivals in endurance, in range of operations, in speed, and in on-board power generation. But China is closing the gap quickly.

China's newest carrier is said to feature three aircraft elevators, the capacity to carry 75 or more warplanes, and electrically powered catapults to launch them. Word has it that the new ship will bear the hull number CVN-18 -- indicating it will be the second to be built after Liaoning (CV-16), and with the "N" designation, will be nuclear-powered.

At present, the new carrier's only incarnation is as a scale model making the rounds in China. But according to Richard Fisher, senior fellow at the International Assessment and Strategy Center, China could begin work on this third aircraft carrier at its Jiangnan-Changxin shipyard in Shanghai "very soon."

Money can't buy happiness -- but it can buy a lot of aircraft carriers
The shift in balance of power at sea, with U.S. influence waning and China in ascendant, has been dramatic. As recently as two years ago, China had no operable aircraft carriers. Now it has one-and-a-half, and a third on the way.

And while some may argue that China can't afford the expense of building nuclear supercarriers, the facts argue otherwise. According to data from the Stockholm International Peace Research Institute (SIPRI) in Sweden, China boasts an annual military budget in excess of $188 billion, making it the world's second biggest defense spender after the United States. And recently, Time put actual Chinese military spending at more than $200 million. So even if Colonel Li Jie at China's Institute of Naval Military Academy laments the high "about 5 billion U.S. dollars" cost of building a nuclear aircraft carrier -- this is a luxury that China's military can certainly afford.

What it means for investors
In the best case, Congress currently anticipates building new aircraft carriers for the Navy at the rate of one every five years. But America currently has only 10 of its federally mandated 11 aircraft carriers operational, and Secretary of Defense Chuck Hagel has publicly floated plans to cut that number to as little as "eight or nine."

Meanwhile, China is rapidly ramping its carrier construction, going from zero to three carriers operational, beginning construction, or entering the planning stages in just the past two years. All too rapidly, the "carrier gap" is closing.

Now, maybe this isn't a bad thing. After all, just this week, Chinese President Xi Jinping argued that it's time to "break the old pattern of conflict and opposition between great powers," and improve "cooperation between China and the U.S." If China intends to use its new carriers to promote freedom of trade in the South China Sea, and deliver aid to neighboring nations struck by earthquakes, tsunamis, and hurricanes -- as the U.S. often does -- then that's all well and good.

But if China's intentions are otherwise -- or if Congress even fears they may become so, and deems it prudent to maintain naval superiority in aircraft carriers -- then the U.S. simply must build more of them, and build them faster. For Huntington Ingalls, the last remaining nuclear aircraft carrier-builder in America, that can only mean good things.

The more and the bigger aircraft carriers China builds, the harder it's going to be for even would-be budget-cutters in Congress to cut back on spending to bulk up America's fleet.

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Artist's depiction of the new Ford-class aircraft carriers. Source: Wikimedia Commons

Read/Post Comments (11) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 13, 2014, at 4:26 PM, Dutchman61 wrote:

    There will be a rapid increase in carriers in the Pacific regardless if the US does anything. Australia will probably begin looking at ships and India is looking at an increase to 5. Japan can not sit still with three helicopter carriers as apposed to at least one true carrier for China. The first two Chinese carriers are hybreds and not true offensive carriers. The third will be their first cut at a real power projection carrier. it is doubtful that it will be successful, but there is little doubt they will get better. Japan has long had the plans for last US conventional carriers which routinely were based and overhauled in Japan. It is commonly believed the Reagan administration gave the complete plans to japan in 1983 and Japan assembled most of the equipment to build three ships. There have been increasing activity concerning building several very large naval vessels and it maybe that Japan is preparing to move forward with three conventionally powered super carriers. it should not be understated that Japan has an edge over China. Only Japan and the US have fought carrier against carrier. Japan's Navy is actually the second largest in the world and their ships are first rate. Their "helicopter destroyers" are giving them a huge training edge since they are fully functional ships and not test beds.

    The article should have noted that Newport News Shipbuilding is the only yard in the world to actually build CVN's with one exception: the feable French carrier which does not even register. The shipyard on paper can build one carrier in 2 years, but reality is the infrastructure that existed just 10 years ago is crumbling due to lack of investment by Obama.

  • Report this Comment On July 13, 2014, at 7:33 PM, Orpheus21 wrote:

    The USA has 19 aircraft carriers. China has 2. China really isn't that big of a threat to the USA. Plus our airforce is waaayyy more advanced than China's airforce too.

    If a war was to ever break out between China and USA, USA would win hands down because of our superior Navy and Air Force.

  • Report this Comment On July 13, 2014, at 7:44 PM, JBaldwin wrote:

    Are we sure these carriers are for keeping the peace or in case of war ? Could there be another purpose ? What i am saying is this just a cover for giving people in high places a means of escaping some cataclysmic event that is not being shared with the public. What is actually behind the sudden escalation of violence that seems to be taking place over half the world.. The air of trust between nations is being diminished and tensions from old grudges are on the rise. It's a lot like the diplomatic atmosphere that precede world war 2 . It's as if all the threads of chaos are coming together at a specific point in time and in spite of all mans efforts to prevent it, it has reached critical mass. Are we in America going to wake up one day soon to a shower of missiles raining down on American cities ? It may not be as far fetched as we think. Our response would be world wide and what better place to be than an aircraft carrier hidden in the vast oceans of the world if you have enough pull to secure a boarding pass.

  • Report this Comment On July 13, 2014, at 8:04 PM, JBaldwin wrote:

    The article should have noted that Newport News Shipbuilding is the only yard in the world to actually build CVN's with one exception: the feable French carrier which does not even register. The shipyard on paper can build one carrier in 2 years, but reality is the infrastructure that existed just 10 years ago is crumbling due to lack of investment by Obama.

    When did it become the job of the president to appropriate funding for ship building ? Isn't this a congressional responsibility .It is congress who have cut funding, it was congress who instituted sequester , it is congress who have been dragging it's feet on jobs programs to rebuild the infrastructure . In spite of the President asking for these things the house has dug in and refused. Let's not forget for the sake of some convenient argument to place blame , who holds the power of the purse as it's Constitutional responsibility. It's not being responsible to blame the president for not doing congresses job. Or was the rhetorical comment in the paragraph above just some half hearted attempt to fool the public and shift the blame from a dis functional congress ? Sounds more like a comment that would be made by some egghead watching Fox news.

  • Report this Comment On July 13, 2014, at 8:42 PM, steve4249 wrote:

    Just remember this China has not fought a navel battle in a 1000 years and has no battle experience, since they tried to invade Japan over a thousand years ago. Only one pilot has taken off from their Russian rebuilt carrier. Their pilots have no idea how to fight in and air battle against tested pilots of the USA Navy, and the US Air Force. It would be the Marianna's Turkey Shoot again.

  • Report this Comment On July 13, 2014, at 11:12 PM, peterwolf wrote:

    So if aircraft carriers are so 'obsolete', as we keep hearing then why are the Chinese building them as fast as they can?? Answer: Because they're NOT obsolete. In fact they remain the most powerful strike platform in the world. And they're getting even more powerful. That is why it is criminal folly that the Obama Administration is allowing the number of U.S. carriers to dwindle to probably no more than 7 or 8 at the present slow replacement rate.

  • Report this Comment On July 14, 2014, at 12:10 AM, Maochinkdung wrote:

    I am wondering in the 5 Bil of dollars spent to build the nuclear aircraft carrier are there any money that is used to spy and steal anything from US? China is well known for being a thief of the century.

  • Report this Comment On July 14, 2014, at 10:14 AM, ReasonJohnny wrote:

    "But so far, the only nuclear-powered aircraft carriers in the world, are those built by Huntington Ingalls for America."

    Well, except for France's Charles de Gaulle built by DCNS Brest. And it isn't some small converted vessel; it's a 40,000 ton monster with capabilities nearly on par with a Nimitz. Nuclear-powered surface vessels are hardly an American-only proposition.

  • Report this Comment On July 14, 2014, at 5:38 PM, jaysun121 wrote:

    Point of order----

    The french have a K15 pressurised water reactors on the charles de gaul aircraft carrier.

  • Report this Comment On July 15, 2014, at 9:16 PM, ManyHats wrote:

    "China boasts an annual military budget in excess of $188 billion, [...] And recently, Time put actual Chinese military spending at more than $200 million."

    Nice proofreading there...Off by $187.8 billion on a website about finances...

  • Report this Comment On July 18, 2014, at 9:44 AM, someoneinnowhere wrote:

    Aircraft carriers are sitting ducks and unlikely to survive a serious missile offensive from multiple sources.... It is true that they are capable of delivering extensive firepower against nearly defenseless opponents... IF world war 3 happened then not a single aircraft carrier is likely to be left floating afterward.... Any target can be fired upon from thousands of miles away

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Rich Smith

As a defense writer for The Motley Fool, I focus on defense and aerospace stocks. My job? Every day of the week, I'm monitoring the news, figuring out the winners and losers, and tracking down the promising companies for you to invest in. Follow me on Twitter or Facebook for the most important developments in defense & aerospace, and other great stories.

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