THE Hong Kong Shipowners Association says it would like to see its member companies participate in inland sea trading business in China after 1997. The association's newly elected chairman George Chao said he would approach China's Ministry of Communications to work on this goal. 'This new business would be quite profitable for our members,' he said after the association's annual general meeting yesterday. Foreign ships cannot call at more than one mainland port per voyage. Mr Chao said he would also try to convince the ministry to withdraw the value-added tax on steel imports to boost the ship-scrapping industry in China. 'I intend to convince them that ship-scrapping is very beneficial to them and very important to the entire shipping industry,' he said. 'There are too many ships being built and not enough being scrapped.' Up to the beginning of last year, China was one of the major locations for scrapping because of its open-door policy and cheap labour. But early last year, the government imposed a value-added tax of 17.5 per cent on steel imports, including scrap, rendering ship-scrapping unprofitable. The association is already working with marine authorities in Hong Kong and China to address the problem of crew short-ages. It has been proposed to increase the employment of mainland seamen on Hong Kong-owned ships and to upgrade their professional standards by providing more training facilities in the territory. Mr Chao said he would also work closely with the Marine Department to help boost the tonnage on Hong Kong's ship register. The association's members control vessels weighing a total of 61 million tonnes. Hong Kong will hold the fifth meeting of the Asian Shipowners' Forum in May. Earlier, in his year-end market review, outgoing chairman C.C. Tung urged owners to remain cautious in the face of falling freight rates. 'While overcapacity is not as severe as that of the tanker sector, scrapping of dry bulk carriers has decreased with the surging market,' Mr Tung said, adding that newbuilding orders had surged on this strength. The order book as a percentage of the dry bulk fleet had risen to cover 12 per cent this year from a low of six per cent in January 1992. While the orderbook for Handysize vessels as a percentage of the fleet had remained healthy at almost six per cent, the order books for Panamax and Capesize had exceeded 10 and 20 per cent, he said. With a projected annual growth of dry bulk tonne-mile demand of only 2.6 per cent from 1993 to 2000, it was not difficult to see that the 'recovery' could easily be suffocated with excessive newbuildings and lower-than-expected scrapping. The association elected James Hughes-Hallet of Taikoo Navigation as deputy chairman, Daniel Bradshaw of Johnson Stokes & Master as vice-chairman and David Boycott of Wayfoong Shipping as treasurer.