China restructuring its shipbuilding industry

China’s State Council wants to restructure and upgrade the technology of its shipbuilding industry to ensure its sustainable development.

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Over the next three years, the council plans to focus on curbing excessive capacity growth and support a shift towards the development of higher value-added ships, including offshore engineering equipment, according to its statement released on Sunday August 4.

Shipbuilders will also be encouraged to retire old ships before their expiration dates.

Beijing aims to keep the country’s total shipbuilding capacity unchanged in 2013-2015, through mergers and acquisitions, and by phasing out obsolete capacity.

“The problems faced by China’s shipbuilding industry lie with the impact of economic cycles as well as its own structures,” Wang Jinlian, chairman of the China Assn of the National Shipbuilding Industry, was quoted as saying in a Xinhua report on the same day.

The plan doesn’t only seek to solve the industry’s overcapacity, but also aims at upgrading it for long-term development, Wang added.

In recent years, shipbuilders in China have been suffering from reduced orders, difficulties in securing loans, and the risk of customers defaulting.

However, new orders for the first half of 2013 have posted an increase.

New orders received by Chinese shipyards grew 113.2% year-on-year over the January-June period to 22.9 million deadweight tonnes, according to data released by the country’s Ministry of Industry and Information Technology in July.

Order backlog among Chinese shipyards was down 13.4% on the year while China’s delivery of completed vessels fell 36% over the same period.