Tuesday, August 6, 2013

China Reveals Shipbuilding Industry Revival Plan

China, home of the world’s biggest shipbuilding market, has revealed a three-year plan to restructure its shipbuilding industry in order to help end a prolonged slump.

The 2013-2015 strategy, which was publicly unveiled by the Chinese State Council August 4, outlines multiple areas of focus to raise the efficiency of the sector and position it as a global competitive industry.

One of the plan’s components is disallowing financial institutions to lend to companies embarking on new shipbuilding facilities. Among the other components are: the advancement of technology in the shipbuilding sector, an expansion into offshore shipbuilding and equipment construction, controls on adding new yard capacity, faster phasing out of old vessels and the capturing of a larger global market share.

The capacity controls involve local authorities and governments strictly controlling new capacity by halting approvals of new shipbuilding facilities as well as stopping projects that had proceeded without first securing the necessary permits.

China had previously said it plans to force consolidation in a number of industries struggling with sluggish demand and severe overcapacity to rebalance the economy. As part of the consolidation, the government wants aging ships dismantled and shipbuilders to build high-end offshore engineering products, which it expects will have higher market demand.

Although the country’s shipbuilding sector is the world’s largest, since the most recent global recession, it has suffered from overcapacity, a shortage of new orders, price declines for building ships and a slump in the freight market.

Under its new three-year plan, the government says, Chinese shipbuilders should aim to secure 25 percent of the global market share for high-tech ships and one-fifth for the global offshore engineering product market by 2015.