Chinese Contracting: A Question Of State Backing?

By Aiswarya Lakshmi
Wednesday, February 17, 2016
Graph Source: Clarkson Research Services Limited

 Contracting at Chinese yards fell significantly in 2015, but the impact has varied greatly across different types of yard, says a report from Clarkson Research Services.

 
Many larger, state-backed builders have continued to secure a steady volume of orders, supported by domestic, state-backed owners. Meanwhile, the share of contracting at independent yards has dropped sharply, with many of these builders facing difficulties due to a lack of new orders.
 
Shipyards in China are segmented in Clarksons Research data into a number of ‘administration types’ according to ownership. ‘State-backed’ builders include the yards owned by shipbuilding groups CSSC and CSIC, as well as national government yards controlled by state-owned groups such as COSCO Shipping. 
 
Other yards can be categorised as independent, foreign owned (FO), joint venture (JV) or local government. The share of contracting accounted for by ‘state-backed’ yards in China fell significantly from 73% in 2001 to 27% in 2009, in CGT terms. Privately owned builders expanded rapidly in this period to take the majority of orders, encouraged by a state-led drive to expand shipbuilding. 
 
However, this trend has been reversed since 2010, with many independent yards now facing difficulties due to the decline in bulker ordering. State owners have supported the shipbuilding industry primarily through ordering at ‘state-backed’ yards, which took 59% of total orders at Chinese yards in 2015, in CGT terms. 
 
The government’s ‘White List’, which includes most CSSC and CSIC yards, has also broadly benefited state builders.
 
Having fallen during the shipbuilding boom, the proportion of orders placed at ‘state-backed’ yards in China has risen sharply since 2010, with Chinese state owners providing significant support. With contracting activity weak and many independent yards facing difficulties, it appears likely that this trend will continue.
 

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