Eagle Intelligence Reports
China’s People’s Liberation Army Navy (PLAN) is considered to have the world’s largest naval fleet with around 370 vessels, a status driven by an aggressive modernization campaign. A significant component of this expansion includes the rapid enhancement of its nuclear-powered submarine capabilities, which are crucial for a credible sea-based nuclear deterrent.
According to a Pentagon report on Chinese military development published in December, the PLAN has constructed approximately 12 nuclear-powered submarines over the last 15 years. This total includes six units of its modern Type 094 nuclear-powered ballistic missile submarine (SSBN) designed to carry and launch long-range nuclear-capable ballistic missiles. They provide Beijing with a critical, survivable second-strike nuclear capability.
Beijing’s escalating underwater capabilities have directly fueled strategic discussions among Washington’s Asia-Pacific allies, including Australia, South Korea, and Japan, regarding their own development of indigenous nuclear-powered submarines. The allies view such submarines as a direct deterrent mechanism against China’s growing regional assertiveness. The acquisition of these boats is seen as a necessary measure to restore a favorable balance of power and challenge the PLAN’s strategic edge in the vital Indo-Pacific region. This allied stimulus signifies a major shift toward greater military self-reliance and interoperability in the face of a shared security concern.
Beijing’s escalating underwater capabilities have fueled strategic discussions among Washington’s Asia-Pacific allies regarding their own development of indigenous nuclear-powered submarines
While the intention to counter China’s naval power is clear, the path for these US allies is fraught with significant challenges. It requires immense investment, technological transfer, and specialized industrial capacity, which often takes several decades to build. Nevertheless, the commitment to develop this capability represents a fundamental, long-term challenge to China’s regional military calculus. Allies are poised to fundamentally reshape the strategic environment and deliver a significant blow to China’s regional strategic dynamics by diminishing the effectiveness of its current naval and anti-access/area-denial (A2/AD) capabilities.
Nuclear-powered submarines (SSNs) are propelled by nuclear reactors that provide capabilities far superior to those of conventional diesel-electric boats. While nuclear-powered, these boats do not necessarily carry nuclear weapons. SSNs’ core operational advantage lies in their virtually unlimited range and ability to sustain higher speeds for extended periods, as they do not require the frequent refueling their diesel-electric counterparts do. These advantages in stealth, speed, and endurance, compared to conventionally propelled submarines, make SSNs indispensable strategic assets for projecting maritime deterrence, especially in blue-water operations.
Beijing deeply recognizes the strategic value of SSNs, especially since President Xi Jinping underscored the importance of advancing China’s submarine capabilities during his inspections of the PLA Navy’s South Sea fleet in 2013 and North Sea Fleet in 2018. Consequently, China is likely leveraging its SSN fleet as a key component of its military strategy to deter and deny access to the US and its allies in the vital waterways near its coast, as well as in the Western Pacific.
Despite its advantages, the nuclear reactors that power SSNs require advanced technology and legal grounds for uranium enrichment, which presents an inherent risk. This technology could be diverted or utilized to develop nuclear weapons, thereby increasing the stress on the nuclear non-proliferation regime. Consequently, the operation of these nuclear-powered boats has been so far restricted to only six countries armed with nuclear weapons: the US, Russia, China, Britain, France, and India.
However, this exclusive nuke sub club is now undergoing significant shifts, driven by the perceived and real naval threats emanating from China’s naval expansion. In response, a new trend is emerging among US allies in the Asia-Pacific that do not possess nuclear weapons, namely Australia, Japan, and South Korea. They are increasingly engaging in serious discussions and plans to construct their own SSNs. This evolution underscores a fundamental shift in the regional security dynamics and sustenance of credible deterrence against a rising power.
The AUKUS security pact, designed to help Australia acquire a conventionally armed, nuclear-powered submarine (SSN) capability, is facing substantial uncertainty and scrutiny. Following US President Donald Trump’s second inauguration, his administration launched a review of the 2021 agreement signed by his predecessor Joe Biden. Beijing widely perceived the security pact as a threat to regional stability and a direct strategy to contain China’s growing naval power.
The AUKUS security pact, designed to help Australia acquire a conventionally armed, nuclear-powered submarine (SSN) capability, is facing substantial uncertainty and scrutiny
The plan dictates that Australia will initially purchase at least three US-made Virginia-class SSNs. However, the eventual goal is to develop a new, trilateral AUKUS-class submarine for both the UK and Australian navies, planned for commissioning in the late 2030s and early 2040s, respectively. President Trump, during his meeting with Australian Prime Minister Anthony Albanese, publicly confirmed that the initiative would move “full steam ahead,” and the review would not kill the project. Yet, fundamental questions about the actual delivery timeline and industrial capacity remain unresolved.
The most acute challenge facing the AUKUS SSN program is the severe strain on the US and UK shipbuilding industrial base. The agreement to sell US Virginia-class submarines to Australia has amplified existing concerns that American shipyards are already struggling to meet the US Navy’s own demand for SSNs. Furthermore, this reality has increased the likelihood of a significant overhaul or adjustment to the trilateral deal under the Trump administration.
This capacity issue is compounded by the fact that Australia currently possesses virtually no domestic capability to build or maintain nuclear-powered submarines. It is entirely reliant on the production lines of its US and UK partners for the foreseeable future. And the lack of available capacity in both the US and UK shipbuilding sectors could lead to inevitable delays in the trilateral SSN program, potentially exposing Australia’s capability gap for an extended period.
In anticipation of these challenges, Canberra is investing in the necessary infrastructure. In September, Australia announced a commitment of A$12 billion to upgrade the Henderson shipyard in Western Australia. The plan is to transform it into a crucial maintenance and sustainment hub for its future AUKUS SSN fleet over the next 20 years. This proactive investment is essential for the long-term viability of the program; however, it fails to address the immediate production bottleneck for the submarines themselves.
Although the Trump administration’s green light ensures the project’s survival, the unfulfilled questions regarding the actual timeline and the collective ability of all three nations to ramp up their industrial production sufficiently suggest that the delivery of Australia’s SSNs remains a challenging and potentially delayed undertaking.
Only a day after he met with South Korean President Lee Jae Myung on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, last month, Trump announced that he approved Seoul’s plan to acquire nuclear-powered submarines. A White House fact sheet released two weeks after the summit formalized the approval. This marked a highly unconventional and strategically consequential shift in US policy toward a non-nuclear ally.
Trump specifically mentioned that the construction of the South Korean SSN would take place at the Philly Shipyards in the US, which is owned by the South Korean shipbuilding company Hanwha Ocean. Such a condition follows the Trump administration’s attempt to revive American shipbuilding capacity, with South Korea playing a significant role under the Make American Shipbuilding Great Again (MASGA) initiative. This project would see South Korean shipbuilders invest $150 billion in the US shipbuilding sector. According to a Bloomberg report, Trump has also reportedly requested to build SSNs not only for the South Korean Navy but also for the US Navy, suggesting that the approval may be aimed at revamping American naval shipbuilding capacity using foreign shipbuilders; a significant shift in the largely covert and classified US naval procurement process.
The US decision followed Lee’s request to Trump. During the summit, Lee articulated the operational necessity of SSNs for extended tracking and maritime denial activities against North Korean and Chinese submarines. He also argued that it would ultimately reduce the US military’s operational burden in the region. Lee’s request centered on obtaining a fuel supply for conventionally armed SSNs and initiating negotiations on the sensitive issues of uranium enrichment and the reprocessing of spent fuel.
Seoul’s pursuit of SSNs has long been blocked by the Atomic Energy Pact of 1974, revised in 2015, and commonly known as the “123 Agreement” between Seoul and Washington. The pact mandates prior US consent for South Korea to enrich uranium below 20% or reprocess used nuclear fuel; a clause designed to prevent the proliferation of fissile material that could be diverted for military purposes. Such a limitation hindered Seoul’s two-decade effort to develop an indigenous SSN capability, most notably the covert “362 Project,” which was established in 2003 but canceled a year later following media exposure and international non-proliferation scrutiny.
The US decision to potentially transfer the necessary, highly classified technological know-how to Seoul is a direct reflection of a new geopolitical calculation. Washington has evidently judged that South Korea’s possession of SSNs is in its best interests. It achieves two goals with one action. Firstly, it revitalizes US shipbuilding capacity, and secondly, it helps contain the Chinese submarine fleet in the Asia-Pacific region. It also aligns with Trump’s transactional approach to defense burden-sharing. The US could potentially revive its shipbuilding through the Hanwha-owned Philly Shipyard in exchange for nuclear-powered submarines and revising the 123 Agreement, allowing South Korea to acquire nuclear propulsion technology. Such a strategic upgrade for Seoul could contribute to countering rising threats from China and North Korea without significantly increasing the cost for Washington.
The US decision to potentially transfer the necessary, highly classified technological know-how to Seoul is a direct reflection of a new geopolitical calculation
Nevertheless, this step to allow a non-nuclear weapons state to acquire nuclear propulsion technology, even for conventionally armed boats, has raised concerns about the nuclear non-proliferation regime. While SSNs are not nuclear weapons, their nuclear reactors require the technology for uranium enrichment, a process that can be used to produce highly enriched uranium to build nuclear weapons. Transferring this capability sets a precedent that may blur the line between peaceful nuclear energy and military applications, potentially weakening the global non-proliferation framework. For instance, there remain international suspicions that granting Seoul uranium enrichment and spent fuel reprocessing capabilities could pave the way for its own nuclear development, citing deterrence against China and North Korea’s rapid development of nuclear arsenals.
Despite the looming non-proliferation scrutiny, voices for developing the SSN have persisted in South Korea, especially since North Korean leader Kim Jong-un declared his own SSN plan in 2021. He was also recently seen inspecting a shipyard reportedly constructing a “nuclear-powered strategic guided missile submarine.”
If the plan for South Korean SSNs is realized, it would transform the peninsula’s strategic dynamics by substantially enhancing the South’s ability to operate its submarines with unmatched stealth and endurance in the surrounding waters. This capability would significantly enhance deterrence against both North Korea and China, as Beijing would find it burdensome to face an ally with heightened maritime denial capabilities near its coast.
North Korea condemned the recent agreement allowing South Korea to develop SSNs, viewing it as a severe security threat and destabilizing factor. Pyongyang’s state-owned media, the Korean Central News Agency (KCNA), denounced the deal as exposing the “confrontational will” of the US and South Korea, saying that the development of the SSN would cause a “nuclear domino effect.”
The recent formation of Prime Minister Sanae Takaichi’s new coalition government, comprising the Liberal Democratic Party (LDP) and the more conservative Japan Innovation Party, known as Ishin, has marked a significant turning point in Japan’s defense policy.
Besides pledging to increase defense spending to 2% of Japan’s GDP by 2027, the new coalition agreement explicitly calls for the introduction of submarines powered by “next-generation propulsion systems.” They are widely understood to mean nuclear-powered submarines, the first such case in a coalition agreement, and a policy pushed by Ishin and supported by a recent Japanese Defense Ministry report. This pivot signals Japan’s heightened strategic anxiety in the face of China and North Korea’s advancing submarine capabilities, reflecting a new political willingness to challenge decades-old norms in pursuit of a powerful undersea deterrence.
This strategic shift directly confronts Japan’s deeply ingrained, post-war nuclear doctrine, particularly the Three Non-Nuclear Principles, which state that Japan will not possess, not produce, and not allow nuclear weapons onto its territory. While SSNs are conventionally armed, their use of nuclear reactors necessitates handling enriched uranium, which technically conflicts with the spirit of the non-proliferation commitment. Indeed, it runs against the Atomic Energy Basic Act of 1955, which strictly limits nuclear energy usage to peaceful purposes.
Nevertheless, Japan possesses an industrial advantage, with both an established production line for advanced, conventional submarines and an autonomous civilian nuclear industry capable of enriching uranium and reprocessing used nuclear fuel. This means that if the governing coalition can secure the necessary votes while overcoming significant anti-nuclear public opinion and constitutional constraints, Japan has the potential to build indigenous SSNs more quickly than its peers.
Despite Japan’s industrial capacity, developing a nuclear-powered attack submarine (SSN) will still require a substantial amount of time. The process involves complex, sequential steps, including designing a small nuclear reactor, training personnel qualified to work with nuclear materials, and integrating the propulsion system into a new boat design. Furthermore, as the only nation to suffer nuclear attacks, Japan must overcome significant political hurdles, tackle anti-nuclear sentiments among the public, and redefine its “peaceful use” nuclear law. Thus, even with political urgency, the transition from decision to delivery of the first domestic SSN would likely take a decade or more.
The strategic pursuit of SSNs by key US allies in the Asia-Pacific region is poised to generate significant friction for China’s expansive naval ambitions. Beijing’s core military doctrine in the Western Pacific revolves around its Anti-Access/Area Denial (A2/AD) strategy, designed to deter and delay foreign military intervention, particularly in its near-seas region. A primary objective of this strategy is to solidify deterrence along the First Island Chain while strategically securing the Taiwan Strait and the South China Sea.
The strategic pursuit of SSNs by key US allies in the Asia-Pacific region is poised to generate significant friction for China’s expansive naval ambitions
The strategic proliferation of SSNs among key US allies directly challenges the current US–China strategic competition. Such a move seeks to redefine the regional balance of power in the Indo-Pacific, enhancing allied capabilities to challenge China’s A2/AD network through a highly effective and persistent presence in the deep waters of the Western Pacific. By enabling US allies to field this high-end military capability, Washington is executing a strategy of distributed deterrence, aiming to double the allied operational SSN presence in the Western Pacific and shifting the burden of containment onto its partners.
The proliferation of SSNs among US allies fundamentally alters the regional balance of deterrence by transforming the undersea domain from a realm dominated primarily by the US and China into a multipolar, multi-layered threat environment for Beijing. The core of China’s A2/AD strategy, which seeks to prevent foreign intervention, relies on limiting adversaries’ freedom of movement in its near seas. However, SSNs can bypass these defenses and maintain a persistent, unpredictable presence near vital Chinese interests and communication lines. This enhanced allied submarine capability severely complicates Chinese operational planning for its Taiwan invasion, as it introduces an intolerable level of risk and uncertainty about the location and number of enemy attack submarines.
Consequently, China would need to recalculate its A2/AD assumptions in contrast to its current defense planning, which assumes a limited number of allied submersible assets. An increase in the number of adversaries with SSN capabilities beyond the US would necessitate a complete shift in Beijing’s strategy and force compositions. It would compel China to reallocate resources from offensive assets towards more defensive and anti-submarine warfare (ASW) platforms. It would also likely shift China’s deterrence doctrine through a significant reallocation of resources, rather than kicking off an SSN arms race, considering that it does not have a high ground in a numerical SSN race against the combined industrial and technological might of the US and its allies.
Meanwhile, the long, challenging timelines for allied SSN delivery create a window of opportunity for China to exploit the capability gap, particularly in the late 2020s and early 2030s. This becomes viable as Australia is yet to receive its first Virginia-class submarines, while Japan and South Korea are still industrializing their domestic SSN programs, leaving the allies’ undersea deterrent temporarily stretched. This could lead to a miscalculation, where China perceives a high chance of success for a first-strike action in the Taiwan Strait, calculating that the combined allied SSN fleet is relatively small and dispersed to effectively disrupt its initial assault. To bridge the strategic capability gap before new SSNs arrive, US allies require enhanced rotational presence, the acquisition of older SSNs, and the integration of advanced non-submarine technologies.
China could perceive a high chance of success for a first-strike action in the Taiwan Strait, calculating that the combined allied SSN fleet is relatively small and dispersed
The US faces a critical deterrence gap in its SSN programs due to shipbuilding delays, impacting commitments with AUKUS, South Korea, and Japan. Delays in delivering Virginia-class submarines to Australia, as well as preliminary hurdles for South Korea and Japan, create vulnerabilities. This could embolden China to exploit the gap before allied fleets are operational, especially given China’s aggressive naval modernization to date. The reliance on forward-deployed rotational forces heightens geopolitical risks, increasing the potential for miscalculation in the Taiwan Strait or South China Sea as both sides test the incomplete allied undersea deterrence.
Assuming successful US and allied production, the Indo-Pacific will achieve a new undersea equilibrium. With Australia, South Korea, and Japan deploying advanced SSNs, a multi-layered allied deterrence network will emerge. This alters the US-China dynamic, making large-scale Chinese naval operations, such as a Taiwan invasion, riskier. China would need to prioritize defensive ASW, effectively limiting its aggressive naval power, implying a stable but intense rivalry, with allied SSN presence ensuring deterrence.
The precedent of SSN transfers prompts other NPT non-nuclear-weapon states to demand similar treatment, escalating a wider arms race and complicating IAEA safeguards. Within the Indo-Pacific, ASEAN states’ initial caution evolves into fear, forcing them to align either with the US-led SSN bloc or Beijing. This erodes ASEAN centrality, replacing it with a rigid, adversarial security architecture.