Saving Subic: Strategic Infrastructure, Development Finance, and the Limits of U.S. Economic Statecraft

Photo: Cheng Xin/Getty Images

Photo: Cheng Xin/Getty Images

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A top global shipyard in the Philippines went bankrupt in 2019. The shipyard was located in Subic Bay, which was historically the site of a major U.S. naval base and is today a key logistical and forward-operating hub for U.S. and allied naval forces in the Indo-Pacific. Offers from Beijing to take over the shipyard materialized swiftly, threatening to rob the United States and its allies of a critical maritime asset and grant China a foothold in a strategically vital location that sits within driving distance of a U.S. treaty ally’s capital. The United States was caught unaware by the bankruptcy; Washington scrambled, largely failing to sustain an interagency intervention and ceding most of the responsibility for securing the shipyard to individual initiative within the private sector and allied governments. In this case, improvisation succeeded, and friends of the United States prevailed in acquiring the shipyard, but Washington’s institutions must be more prepared and agile next time. 

This CSIS report provides a definitive account of the Subic Bay shipyard episode, drawing on more than 35 firsthand interviews with decisionmakers in the Philippines, the United States, and Japan. The findings illustrate how the U.S. government failed to use formal levers to compete with the People’s Republic of China (PRC) and decisively intervene when a strategic infrastructure asset was at risk of falling into adversarial hands.

The United States too often finds itself on the back foot when reacting to Chinese investments that harm U.S. interests. At the same time, the United States has recently stepped up global efforts to counter the spread of Chinese influence over critical assets overseas, particularly maritime facilities such as ports. This report analyzes the Subic case study to draw lessons on what worked and what did not, and provides recommendations to strengthen the U.S. economic tool kit for safeguarding and developing strategic infrastructure abroad. Ultimately, the report aims to provide a roadmap for bolstering institutional effectiveness, increasing allied coordination, and better harnessing private capital to secure U.S. economic, development, and security interests.

This report is made possible by the generous support of the Smith Richardson Foundation.

This report is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2026 by the Center for Strategic and International Studies. All rights reserved.

Tags

Asia, Southeast Asia, Defense and Security, Defense Budget and Acquisition, Economic Security, Maritime Issues and Oceans, and Satellite Imagery
Thomas Bryja

Thomas Bryja

Program Manager and Research Associate, Project on Prosperity and Development

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