Ghost town a grim backdrop for Rongsheng's woes

Deserted flats and boarded-up shops in the Yangtze River town of Changqingcun serve as a blunt reminder of the area's reliance on China Rongsheng Heavy Industries Group, the country's biggest private shipbuilder. Like Rongsheng's shipyards, the area is struggling to survive.

The shipbuilder last week predicted a substantial annual loss, just months after appealing to the government for financial help as it reeled from industry overcapacity and shrinking orders.

Rongsheng lost a record 572.6 million yuan (HK$729.8 million) last year, and lost 1.3 billion yuan in the first half of this year.

The company has become a test of the mainland's market reforms.

While Beijing seems intent to promote a shift away from an investment-heavy model, with companies reliant on government cash injections, some analysts say Rongsheng is too big for Beijing to let fail.

As ship orders and funding have dried up, the firm has delayed deliveries and now faces legal disputes, shipping and legal sources said.

The company - whose market value has slumped more than 90 per cent to about US$1 billion since its Hong Kong listing in 2010 - is in talks with bankers to restructure its debt.