China’s First Aircraft Carrier Was Bought from Ukraine By a Travel Agency for $20,000,000 in 1998 Under a Plan to Make It a Floating Casino in Macau. It Was Commissioned Into the People’s Liberation Army Navy as the Liaoning.

Summary and Key Points: In 1998, a Macau company, Chong Lot Travel Agency, bought an unfinished warship from Ukraine for $20,000,000. The ship was the Varyag, the second hull of the Soviet Union’s Kuznetsov-class carrier program, stranded incomplete in a Ukrainian yard when the USSR collapsed in 1991 — roughly 60,000 tons of aircraft carrier with a ski-jump bow and no engines. Chong Lot’s stated plan was to tow it to Macau and turn it into a floating hotel with casino and entertainment facilities. The story was not absurd on its face, because China had already bought retired Soviet carriers and turned them into tourist attractions. One detail did not fit. The purchase reportedly included substantial technical documentation for the ship. No one building a hotel needs a warship’s blueprints.

How China Got Its First Aircraft Carrier 

In 1998, the Macau company Chong Lot Travel Agency purchased an unfinished warship from Ukraine for $20 million.

The ship was the Varyag, an unfinished Soviet aircraft carrier.

Chong Lot’s ostensible plan was to tow the enormous carrier all the way to Macau, convert it into a floating hotel, add entertainment and casino facilities, and create a maritime tourist attraction.

The casino never opened, however.

Instead, the Varyag was taken to a Chinese naval shipyard, and after years of reconstruction, commissioned as the Liaoning—the People’s Liberation Army Navy’s first aircraft carrier.

What had been proposed as an eccentric $20 million tourism investment became the foundation for China’s carrier ambitions.

Lost in the Collapse

The Soviet Union began construction of the Varyag during the 1980s in what is now Ukraine.

It was to be the second ship of the Project 1143.5 Kuznetsov-class, after the Admiral Kuznetsov.

At roughly 60,000-plus tons fully loaded, the carrier was dependent upon a distinctive ski-jump bow for launching aircraft, rather than the steam catapults familiar aboard American carriers.

The original design also included substantial ship-launched weaponry, including the large P-700 Granit anti-ship missiles.

But before the Varyag could be completed, the Soviet Union collapsed in 1991, leaving the vessel stranded in Ukraine.

So Ukraine inherited a huge, unfinished hull—yet had no financial or strategic incentive to finish the project. By the end of the decade, major systems remained incomplete, much of the military equipment had been removed or was absent entirely, the ship, of course, had no operational carrier air wing, and Ukraine just wanted the thing gone.

China saw something different in the unfinished hull, however: a ready-made aircraft carrier, the seed of a new program that could lead to blue-water operations.

Creating the Travel Agency

The acquisition of the Varyag is closely tied to Xu Zinging, a former PLA basketball player who became a businessman in Hong Kong.

Xu’s Chong Lot company bid on the ship in 1998, proposing a floating entertainment complex in Macau.

The story seemed feasible, as China had a precedent for buying former Soviet carriers for entertainment purposes; both the Minsk and Kyiv, former Soviet carriers, eventually became Chinese tourist attractions.

This gave the Varyag cover story some plausibility.

But the Varyag was different from the Minsk and the Kiev in one fundamental way: the Varyag was brand new, albeit unfinished.

It wasn’t some rusted-out, disposed-of hull; it could be reconstructed and serve.

Cleverly, the purchase reportedly included substantial amounts of technical documentation to facilitate the reconstruction.

Getting the Thing Home

Purchasing the Varyag was easier than getting her back to China. Obviously, the hull wasn’t finished; it didn’t have a propulsion system or a crew—so it could not simply be sailed back to China.

Instead, they had to tow it thousands of miles.

The first obstacle was Turkey.

The carrier needed to pass through the narrow Bosphorus to escape the Black Sea.

Turkey initially refused passage, forcing China into a protracted 16-month negotiation.

Turkey eventually relented, allowing passage in November 2001 with extensive safety precautions.

Soon thereafter, a storm in the Aegean caused the towlines to break.

The Varyag drifted dangerously before the tugs regained control.

A sailor died in the operation.

From there, the carrier undertook a massive journey through the Mediterranean, around the Cape of Good Hope, across the Indian Ocean, through Southeast Asian waters, and finally north to China.

The Varyag arrived at Dalian on March 3, 2002, having covered roughly 15,000 nautical miles.

And upon arrival, it became clear: there was never going to be a Macau casino.

Completing the Hull

China set about completing the Varyag, ultimately converting her into the Liaoning.

But that would take years of serious engineering. Specifically, engineers had to finish or rebuild everything from propulsion and electrical systems to sensors, comms, flight-deck systems, weapons, and aviation support infrastructure.

J-15 Fighter from China. Image Credit: Creative Commons.

J-15 Flying Shark Fighter from China.

J-15 Fighter. Image Credit: Creative Commons.

And when the ship was completed, China outfitted it with the Shenyang J-15, a large twin-engine fighter derived from the Flanker family.

And while the Liaoning was relatively humble—especially compared to American supercarriers already in operation—it marked a start: a training and experimentation platform from which China has become increasingly adept at carrier operations.

The casino lie was the seed of the entire program.

About the Author: Harrison Kass

Harrison Kass is a writer and attorney focused on national security, technology, and political culture. His work has appeared in Tablet, City Journal, The Hill, The Spectator, and The Cipher Brief. He holds a JD from the University of Oregon and a master’s in Global & Joint Program Studies from NYU. More at harrisonkass.com.