Europe market seen as key to growth

Mainland shipyards plan to expand their 5 per cent share of the world shipbuilding market to 10 per cent by 2000 as part of a long-term plan to dominate the world market within 15-25 years, according to the China Daily Business Weekly.

The China State Shipbuilding Corp (CSSC) was targeting annual turnover of 30 billion yuan (about HK$27.88 billion) and output of three million deadweight tonnes (dwt) in 2000, the report said.

Most of the expansion was forecast to come from Europeans, who found Chinese shipyards offered similar quality to their South Korean and Japanese rivals, but at lower prices.

The CSSC Dalian yard recently won an order for two oil-product tankers from Denmark's A.P. Moeller. The firm said the shipyard was chosen because of its good design specification and competitive pricing.

In the second half of last year, mainland shipyards won 14 tanker orders with 545,700 dwt - equivalent to 6 per cent of the world's orders for tankers and achieved despite a lack of facilities to build very large crude carriers. Half of the orders were from European owners.

China was ranked third behind Japan and South Korea, but its cost advantages would prevail as it closed gaps in technology and management quality, CSSC official Yang Ye said, adding that Chinese labour costs were just 5 per cent of those in Japan.

International demand for new ships would peak at 35-45 million dwt in the next 15 years, spurring expansion of the mainland industry, he said. CSSC exported 1.6 million dwt of ships last year, up 130 per cent from sales abroad in 1995. Exports accounted for 85 per cent of 1996 production.

CSSC policy research bureau director Zhang Zhaoqi said the industry would be a lynchpin of the mainland economy because its material and technological requirements involved more than 50 industrial sectors including machinery, electronics, chemicals and steel.

The mainland's railways showed higher freight earnings in the second quarter despite a drop in traffic as less profitable services were halted, China Daily reported.

This coincided with the release of State Statistics Bureau figures for the six months to June 30 which showed the volume of rail freight fell 1.1 per cent to 668 million tonnes. Freight volume was down 1.4 per cent at 1.1 billion tonnes with less cargo being moving by rail and road.

Road transport moved 177 million tonnes of cargo, down 2.7 per cent year-on-year. Air freight grew 8 per cent to 488,000 tonnes, data showed.

The railways - once the backbone of the domestic transport system - have struggled to compete with rivals such as long-distance buses and airlines as road and air transport improved.