Ship sector plan draws lofty goals
Last Updated(Beijing Time):2009-06-05 09:27
China expects its shipyards to have 50 million deadweight tons (DWT) in annual capacity by 2011 and account for at least 35 percent of the global total by then, a detailed industry stimulus plan issued by the Ministry of Industry and Information Technology (MIIT) yesterday outlined.
The government is keen that hi-tech and high value-added ships would account for at least 20 percent of the total number of ships it produces. Domestically made parts, such as middle-speed diesel engines, should account for at least 60 percent of the total parts in these ships, the government plan noted.
It also wants to turn the Bohai Bay Rim into a world-class shipbuilding base, according to the plan.
The three-year plan revealed that the government would encourage qualified shipyards to float shares and issue corporate bonds to raise funds.
It will also accelerate the pace of establishing a shipbuilding industry investment fund, the plan said, without elaborating on a time frame and the size of the proposed fund.
The government will extend credit support to shipyards that were hit hard by plunging orders and will offer loans to foreign companies buying China-built ships and vessels, the plan said.
The specific plan, whose draft has already been approved and issued by the cabinet, comes at a time when the shipbuilding industry globally is being heavily battered by plummeting new orders as a result of the global financial crisis.
China's shipbuilding industry, the world's second biggest behind South Korea, has also been hit hard since the second half of last year, although it fared relatively better than its overseas peers.
New orders placed with the country's shipyards fell 95 percent during the first four months of this year to 990,000 DWT, MIIT said last month.
New orders reached 200,000 DWT in April, bringing to 195 million DWT the total order books at the end of April, 7 percent higher than a year earlier, the industry regulator said.
Currently, Chinese shipyards have a combined production capacity of 28.81 million DWT, accounting for 29.5 percent of the world's total, MIIT figures showed.
The latest move, analysts said, was likely to boost some of the country's large shipyards, such as China CSSC and Guangzhou Shipyard, as the plan calls for mergers and acquisitions in the fragmented industry.
"The plan is going to beef up Chinese shipyards' competitive edge in the long run," Industry Securities said.
The plan, analysts and industry watchers said, was unlikely to lessen shipyards' pain immediately and an overcapacity problem was likely to emerge.
"As the orders at shipyards have been falling in the past seven months consecutively, shipyards' capacity is going to run idle in the coming years and the problem of overcapacity is likely to surface next year," the China Association of the National Shipbuilding Industry, an industry body, said.