Xinhua News Agency

Beijing edict boosts domestic builders

PUBLISHED : Saturday, 26 December, 1998, 12:00am
UPDATED : Saturday, 26 December, 1998, 12:00am

Beijing has ordered domestic shipping companies to buy locally built vessels in a bid to protect mainland shipyards as they struggle to fend off competition.

H-share Guangzhou Shipyard International is expected to be among the beneficiaries of the order issued by the State Council and the Ministry of Communications.

Leading mainland shipowners had expressed sympathy for local shipbuilders and promised to buy their vessels, Xinhua reported.

Domestic shipbuilders have been badly hit by the competitive edge that currency declines have given Japan and South Korea, with many mainland shipping firms switching orders abroad.

Mainland yards have also received few new purchase orders from foreign firms since the outbreak of the Asian financial crisis late last year.

In the first nine months of this year, mainland shipping firms placed orders with Japanese and South Korean shipbuilders for vessels with a total tonnage of 1.79 million, doubling last year's figure, the Xinhua report said. The orders were worth about US$1.25 billion.

The figures were released by the mainland's flagship shipbuilding firm, China State Shipbuilding Corp (CSSC), which added that imported vessels now accounted for as much as 80 per cent of the country's fleet.

Mainland shipbuilders had in recent years secured more than one million tonnes of orders annually in the world market, but the figure was much lower this year, the report said.

CSSC forecast a continuing strong demand for new vessels as the mainland planned to add a further 120 vessels to its fleet in the next four years with total tonnage of five million, estimated at $1.8 billion, the report said. Large bulk carriers were most urgently needed, it said.

CSSC president Xu Penghang said the mainland should try to prevent 'excessive losses of domestic orders'.

'Efforts should also be made to improve basic shipbuilding facilities and further modernise the industry, to prepare for another possible shipbuilding peak following the ending of the financial crisis,' he was quoted as saying.

Mainland shipbuilding capacity ranked third in the world although it was far behind Japan and South Korea, the report said.