China: Action plan in place to fine tune shipbuilding sector

Recently, the State Council issued the Implementation Plan about Accelerating Structural Adjustment and Promoting Reform and Upgrading of the Shipbuilding Industry (2013-2015). This is an action plan for the shipbuilding industry to accelerate structural adjustment, solve the problem of excessive production capacity, and improve competitiveness of the industry in order to cope with the deep-seated influence of the international financial crisis.
On August 20, a person from the National Development and Reform Commission told the reporter in an interview that since the start of the formulation of the Implementation Plan in September last year, the NDRC has increased effort to study the problem of excessive production capacity of the shipbuilding industry and predict the trend of its development. The Implementation Plan proposes measures to solve the problem of excessive production capacity in the last three years of the 12th Five-year Plan, accelerate structural adjustment, and maintain the stable and sound development of the shipbuilding industry.
It is told that the Implementation Plan is not a short-term stimulus policy to expand demand; instead, it is a forward-looking plan to promote reform and upgrading in the long run. Under the current complicated economic condition, to curb capacity excess and promote the structural adjustment and reform and upgrading of the shipbuilding industry is an important way to improve "made in China" and reform the growth model. The Implementation Plan aims to accelerate the reform of the growth model of the shipbuilding industry and improve development quality and benefit; it gives play to the market roles of enterprises, enhances innovation momentum, and proposes to improve the international competiveness and achieve qualitative evolution of the shipbuilding industry.
In recent years, with the development of the shipbuilding industry, mainstream ship models have developed brand effect, industrial layout has been optimized, and development quality has improved significantly. China has become one of the most influential shipbuilding nations in the world. Nonetheless, China's shipbuilding industry is currently facing severe conditions, with prominent problems.
It is learned that China's shipbuilding industry depends too much on export. For years, exported vessels have been accounting for more than 80 percent of total, making the industry highly susceptible to the fluctuation of the world economy. Affected by the deep-seated influence of the international financial crisis, new vessel markets remain depressed, ship price keeps going downwards, shipbuilding enterprises are having increasing difficulty in their operation and production, negative industrial pressure continues to increase, and production capacity excess exacerbates. Problems of the industry due to extensive development over the years, such as weak innovation capacity, uncompetitive upmarket products, and outdated auxiliary equipments, are becoming more prominent.
From the perspective of the development trend of the global shipbuilding industry, at present the shipbuilding industry has entered a new round of extensive adjustment period and will remain so for quite some time due to the sustained depression of the world economy in recent years. On one hand, the problem of global shipping capacity excess stands prominently and many shipping companies have been suffering losses. This has dealt a heavy punch on the shipbuilding industry, and demand of the shipbuilding market may not be able to recover substantially for years. On the other hand, the collective promulgations of new rules, new conventions, and new standards in international shipping and shipbuilding are urging ships to become more energy-saving, safer, and environmentally friendlier; the demand mix is changing extensively, and upmarket products are becoming new growth points of the market. Therefore, all-round competition centered on technology, products, and market in the global shipbuilding industry will become more intensified with every passing day.
From the perspective of the development of China's shipbuilding industry, the industry is currently facing unprecedentedly severe challenges. As of the end of June this year, China's shipbuilding industry had a total order quantity of 108.98 million dead weight tons in process, only half of that at the end of September 2008; such an order quantity can sustain production for only one year and a half for the industry that has a shipbuilding capacity of up to 80 million dead weight tons. Most companies in the industry do not have sufficient operation rate. In the first half of the year, the output value, export, and profit of the 80 medium- to large-sized enterprises monitored by industrial association slipped 16.6 percent, 24.7 percent, and 53.6 percent respectively, creating more difficulty for production and operation.
Under current circumstances, in order to maintain and strengthen its position in the international market and lay a solid foundation for its development in the 13th Five-year Plan and in the future, China's shipbuilding industry needs to follow the major trend of the extensive adjustment of the global shipbuilding industry and seize the development opportunities. It is necessary to extensively promote structural adjustment, accelerate reform and upgrading, and achieve the transition from increased investment and simple inclusion in the global labor division system to expanding effective demand, enhancing innovation, and improving quality and profit.
Relevant personnel from the NDRC said that: in order to stabilize the development of the shipbuilding industry in the next 3 years, the Implementation Plan proposes measures on 6 aspects: first, encouraging the elimination and renewal of old shipping vessels; second, supporting the renew and revamping of government vessels and fishing vessels; third, encouraging ship buyer credit loan; fourth, increasing credit financing support and innovative financing support; fifth, improving technology advancement and technology restructuring of enterprises; and sixth, controlling new production capacity and supporting structural adjustment of production capacity.
_{Source: CE.cn}