Should America Be Scared of China's New Aircraft Carrier?

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

Well, it's official now: China has one aircraft carrier -- and it's building a second.

Once known as the Soviet aircraft carrier Varyag, China's flagship now goes by the name Liaoning, and is the biggest ship in the People's Liberation Army Navy (PLAN) by far. In 1998, China bought Liaoning from Ukraine as a half-built hulk for just $20 million (ostensibly for the purpose of turning it into a floating casino), then rebuilt it from the keel up for an estimated $2 billion.

Liaoning began its sea trials in 2011, then completed them, was commissioned into the PLAN, and began flight trials in 2012. Today, China has joined world powers Brazil, France, India, Italy, Russia, Thailand, the U.K., and of course the United States as a fully fledged member of the world's "aircraft carrier club." And over the weekend, Chinese state media confirmed that the country has begun construction on a second carrier...

It depends on what the meaning of "aircraft carrier" is. Source: Wikimedia Commons

Define "aircraft carrier"
Of course, what exactly qualifies as an "aircraft carrier" is itself up for debate. Around the world, so-called "carriers" range in size from Thailand's Chakri Naruebet -- a veritable bathtub toy at 11,500 tons displacement -- to France's Charles de Gaulle, weighing in at 42,000 tons, fully loaded, to the new 100,000-ton American supercarrier USS Gerald R. Ford (CVN 78) -- currently under construction at Huntington Ingalls (HII +4.98%).

So where does China's Liaoning place in this continuum? What are its capabilities compared to, say, the Ford? And are American taxpayers getting good bang for their buck with Ford, relative to the Chinese with their Liaoning?

Here are the numbers:

Naval superiority -- at a price
The stats make two things immediately clear. First, there's a huge disparity in cost between the two carriers. For a vessel less than twice the tonnage of the Liaoning, USS Gerald R. Ford is costing U.S. taxpayers more than six times the price: $12.8 billion, and that's before you count the $5 billion spent on researching and developing America's newest supercarrier.

That said, Ford is a more capable warship, and a more clear and present danger to enemy warships, than Liaoning. Once Huntington Ingalls finishes work on Ford, and Lockheed Martin (LMT +1.71%) delivers her complement of F-35 stealth fighter jets, Ford will pack three times as many fighter jets as Liaoning -- and better fighters to boot. Even were the capabilities of the fighters equal, China would need to build or buy three Liaoning-class aircraft carriers to match the capabilities of a single Ford.

China has a PLAN
Will China build three carriers to match each Ford-class carrier that America builds? Not likely. Current Pentagon plans are to eventually replace all Nimitz-class aircraft carriers with Fords -- 11 vessels in all. Building and maintaining 33 aircraft carriers might be beyond China's abilities.

But experts believe that PLAN does want at least four aircraft carriers by 2020. That includes the Liaoning, the second, homegrown vessel of similar size that China just confirmed is in the works, and probably two larger, 100,000-ton warships to be built at a future date.

The cost of these larger vessels would be significant. Colonel Li Jie at China's Institute of Naval Military Academy estimates it at "about 5 billion US dollars to build such a large-size aircraft carrier."

Still, People's Liberation Army Major General Luo Yuan is on record calling for no fewer than three aircraft carriers to be built for the PLAN. Explains the general: "If we consider our neighbours, 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 we can defend our rights and our maritime interests effectively." 

The upshot for investors
On the one hand, General Luo Yuan's statement makes it clear that in building its aircraft carriers, China has its eye primarily on maintaining parity with other regional powers -- not with challenging America's dominance in seas around the globe. That being said, the mere fact that China has entered the aircraft carrier club, and is racing to build more and bigger aircraft carriers, will make it hard for even budget-cutters in Congress to cut back on spending to bulk up America's fleet.

Regardless of the cost.

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