- China’s first aircraft carrier, the Liaoning, is a total refit of an incomplete Soviet cruiser-carrier.
- China’s navy acquired the carrier in the late 1990s, but it did so without approval from Beijing.
- After a bit of subterfuge and years of delays, the Liaoning was launched in 2012.
- See more stories on Insider’s business page.
However, the story of how China got that ship in the first place may as well be a comedy – because the carrier was actually a rogue acquisition for the Chinese military against the wishes of the government in Beijing. And it was undertaken by a basketball player who claimed he wanted to build a floating casino.
The People’s Liberation Army Navy first became interested in acquiring an aircraft carrier in 1970, when China was still on bad terms with both the Soviet Union and the United States. However few concrete steps were taken, because the cost and complexity of such an endeavor far exceeded the PLAN’s limited capabilities during the Cold War.
The Soviet Navy did deploy its first carriers in the 1970s: Kiev-class vessels that could launch Yak-38 Forger jump jets of limited effectiveness. By the 1980s, the Soviets began construction of two more promising Kuznetsov-class carriers. These had a “ski jump” ramp, allowing more conventional – and much higher-performing – Su-33 Flanker fighters to take off from it.
Like the earlier Kiev class, the Kuznetsov was technically an “aircraft-carrying cruiser” due its powerful armament of 12 P-700 Granit antiship missile systems.
This technicality was important, as “aircraft carriers” proper weighing more than 15,000 tons (which is to say, virtually all aircraft carriers today) were not legally permitted by the Montreux Convention to transit from the Black Sea to the Mediterranean via the Bosporus Straits.
However, the fall of the Soviet Union left the second vessel in its class, the Varyag, only two-thirds complete in Ukraine, lacking its armament and electrical systems. Construction ceased in 1992, and the cash-strapped Ukrainian government did its best to pawn off the 55,000 tons of inoperable metal rusting in its Mykolaiv shipyard. Russia, India and China all passed.
It turns out the PLA Navy did want the Varyag – the team sent to inspect it recommended purchasing it! But the government in Beijing was worried that acquiring a carrier might increase tensions at a time when it was seeking to further open itself to Western investors.
Instead, in 1996 a group of PLA officers including intelligence chief Gen. Ji Shengde approached Xu Zengping, a former PLA basketball star who had become a successful businessman arranging international events.
The cabal’s proposal: to have Xu purchase the carrier as a private citizen, ostensibly to serve as a casino so as to avoid undesirable scrutiny. Then the PLAN could collect it for its own use once the political winds were more favorable.
This cover story is not as ridiculous as it sounds. Remember those Kiev-class carriers mentioned earlier?
Two of them are now moored in China, serving as amusement parks. The Minsk was actually purchased by a consortium of video-game arcade owners in Shenzhen for $4.4 million and has since been moved to Nantong, north of Shanghai. And the original Kiev? Now a floating hotel in Tianjin.
However, the more modern Kuznetsov-class Varyag was undoubtedly of much greater practical interest for the PLAN than either of those ships.
Xu was down with the scheme and borrowed the equivalent of $30 million in Hong Kong dollars from a friend to help fund the venture – the first expense of which was to create a $6 million shell company in Macau called Agência Turística e Diversões Chong Lot Limitada, in order to maintain the fiction. (Macau was still in its last years as a Portuguese colony at the time.)
In January 1998, Xu arrived in Ukraine and met with the shipyard owners. After four days of negotiations, in which enormous bribes were offered and 50 bottles of 124-proof baijiu liquor were consumed, he reached an agreement to purchase the carrier for $20 million – well below the cost of a single jet fighter today. He wasn’t able to make the payment until a year later, with a $10 million extra late fee tacked on.
Some international observers smelled something fishy in the arrangement – Xu’s company did not actually have a gambling permit in Macau, nor a listed phone number or address. Ironically, however, a Jane’s analyst interviewed by The Washington Post at the time stated it was “farfetched” that the PLA Navy would try to operate the Varyag due to its decrepit and incomplete condition.
By June 2000, everything was ready to go. The carrier’s four engines were packed in grease seals (they had yet to be installed), several tons of blueprints were sent overland to China by truck, and a Dutch towing company was ready to tug the 306-meter-long vessel all the way back to China. What could go wrong?
Ever been stunned by the towing fee after your car breaks down far from home? Imagine that, but around 500 times worse. Why 500? Because that equals the roughly 500 days the Liaoning was stuck being towed in circles off Istanbul, after the Turkish government denied it passage to the Mediterranean via the Bosporus Straits.
The Turkish maritime minister argued that should there be a mishap towing the 306-meter-long carrier – which could not maneuver or move on its own power – it might spin around and block the Bosporus straits to all shipping, or run into one of the bridges connecting the two halves of Istanbul.
The straits are only 700 meters wide at their narrowest point and require at least six major course corrections to navigate. Hundreds of ships had suffered accidents there in the past. Curiously, the Chinese appear to have perceived the Turkish refusal to be in retaliation for China’s opposition to the NATO air campaign in Yugoslavia the previous year.
The Liaoning spent 16 months racking up $8,500 a day in towing fees. Finally, Beijing had a change of heart on the matter, and stepped in on August 2001, promising major concessions on tourism to persuade the Turks to let the Varyag pass.
Finally on November 1, in an operation involving more than two dozen tug and emergency vessels, the Varyag was towed through the Bosporus without incident, and traversed the Dardanelles the next day. The hard part was over.
Except for the sea storm with 60-mph winds that struck the rudderless vessel off the island of Skyros two days later, causing it to snap its tow lines. It took two more days to recover the runaway carrier. Tragically, a Portuguese sailor fell to his death while helping reconnect it to its tugs.
Once under power, a normal vessel could have taken the shortcut through the Suez Canal and straight on back to China via the Indian Ocean. But the canal would not accept powerless vessels such as the Varyag, so it had to cruise all the way around Africa, Vasco de Gama-style, chugging along at a brisk jog of 7 mph.
In March 2002, the carrier finally arrived at the port of Dalian in Liaoning province, which would lend the carrier its name in Chinese service. Three years later, it was put into a dry dock to allow for an extensive refit process, including sandblasting away all the rust and restoring and installing the engines in 2011.
The PLAN intended to operate the vessel as a pure carrier, rather than as a cruiser-carrier hybrid, so the shipbuilders didn’t bother with the enormous anti-ship missile systems. They instead confined its armament to a trio of short-range HQ-10 air-defense missile launchers and a few close-defense guns. The vessel’s primary weapon, of course, would be its complement of 24 J-15 Flying Shark fighters.
The Flying Sharks are domestic copies of the Russian Su-33 fighter, a prototype of which was also acquired from Ukraine in 2001. The Liaoning also flies six Z-12F anti-submarine helicopters, four airborne early-warning variants and two Z-9 rescue choppers.
The Liaoning was commissioned on September 25, 2012, and the first J-15 landed on it a month later. A home-built carrier based upon the Liaoning will soon put to sea this year; those blueprints must have proved useful.
The Liaoning is hardly equal to a US supercarrier – in addition to its smaller air wing and lack of a nuclear power plant, its steam turbines are prone to breaking down and the ski-jump deck limits the fuel and weapons load its fighters can carry.
However, it afforded China a leap forward in its naval construction program – which now includes five more carriers in the coming decade of increasing planned capability. According to Xu Zengping, a naval officer told him that the Varyag saved China 15 years of research and development.
So was Xu richly rewarded for his initiative? He was rewarded with bills: $120 million in all in Xu’s estimation, forcing him to sell his decadent home in Hong Kong and spend all of the intervening years paying his lenders back.
You see, Gen. Ji was jailed in 2001 for his involvement in a massive smuggling ring in the city of Xiamen – so the cabal of officers that set Xu up for the task was no longer around to see that he was compensated.
Beijing did pay for the $20 million value of the carrier – but argued that it couldn’t cover other costs because he lacked receipts. Apparently, invoices – or fapiao in Mandarin – don’t come standard with bribes paid to Ukrainian businessmen. And, as one quickly learns in China, you always need the official fapiao.
So if there’s a moral to the story of the Varyag, it’s not to expect too much gratitude for your good deeds … and always keep the receipt.
Sébastien Roblin holds a master’s degree in conflict resolution from Georgetown University and served as a university instructor for the Peace Corps in China. He has also worked in education, editing and refugee resettlement in France and the United States.