China is pushing for the scrapping of old ships and urging shipbuilders to focus on the high-end offshore engineering market as part of a plan to restructure the nation's shipbuilding industry, Reuters reports.
"We still have a lot of old and fuel-intensive vessels currently being used in the market," said an executive with a Chinese ship owner.
"Scrapping those old ships would be crucial to solving the overcapacity problem."
The three-year plan released by the State Council, also calls for local authorities to limit new capacity by stopping permitting and lending for new shipbuilding facilities and cancelling projects that had gone ahead without necessary permits.
The plan encourages shipbuilders that are restructuring and moving toward mergers and acquisitions to issue corporate bonds to finance their plans.
Shipbuilders are also encouraged to build high-end offshore engineering projects for the domestic Chinese market, and also to capture one fifth of the global market by 2015.
The plan also calls for Chinese firms to hold a quarter of the global market share for high-tech ships by that year.
Analysts said the process of reducing excess capacity will be long and painful since large closures would hurt employment.
Some industry watchers have been saying for more than a year that a large number of Chinese shipbuilders must file for bankruptcy to clear up overcapacity in the industry.
Reports suggest that the relatively low-technology vessels typically made in the nation have made the industry more economically vulnerable than its South Korean counterpart as ship owners seek out sophisticated, fuel-efficient vessels.
Source: ship and bunker. 5 August 2013http://shipandbunker.com/news/apac/944911-china-pushes-for-vessel-scrapping