The Chinese Shipbuilding Industry

China is making a concerted effort to establish itself as a major maritime power. It is now the world's third largest shipbuilder in terms of gross tonnage, surpassed only by Japan and South Korea. The high volume of these three Asian countries comes from commercial, not naval (military), construction.

Commercial shipbuilding has, however, always been considered a strategic industry, and not only because its infrastructure can also support warship construction. England at the dawn of the industrial revolution, and Japan as it strove to catch up with the West in the 19th century, both used shipbuilding as a catalyst for wider economic development.

Workers in a shipbuilding base in Yichang, Hubei. China became the world's largest shipbuilder in terms of contracts volume in the first half of 2010.

China is the world's tenth largest trading nation, accounting for 4 percent of world trade and the World Bank estimates that China could become the second largest trading state by 2020. The Chinese-flag merchant fleet numbers more than 1,500 ships, over 700 of which have a displacement over 10,000 deadweight tons. In comparison, U.S.-flagged merchant ships over 10,000 dwt number less than 470, with a third of these owned by the U.S. government.

Less than 3 percent of America trade is carried in U.S.-flag ships, and American ships represent less than 1 percent of world commercial tonnage (down from 9 percent 20 years ago).These low shipping figures persist despite the fact that U.S. imports account for 18.5 percent of total world imports and U.S. exports make up 12.4 percent of the global total. Washington has not followed a policy to leverage its position as the world's largest trading nation into leadership in maritime commerce or industry.

A study of the Chinese shipbuilding industry by the European Commission found that Beijing has managed to expand its share of world shipbuilding to 7 percent. “There has been significant capacity expansion in recent years both through the construction of new facilities and the upgrading of existing shipyards," reports the EC. The United Nation's Economic and Social Commission of the Asia and Pacific Region predicts container ship traffic in the region will double over the coming decade, with Shanghai replacing Singapore as the second busiest port next to Hong Kong.

China's shipbuilding industry still has obstacles to overcome before it can take full advantage of the opportunities offered. Beijing's goal of sourcing 80 percent of ship components from Chinese industry by 2000 was not met. The actual use of Chinese-made equipment is very limited due to its poor quality. This is most vexing in the area of propulsion systems. China has also been importing advanced production methods and capital equipment, including complete production lines. Using foreign sourced computer-aided design and computer-aided manufacturing (CAD/CAM) hardware and software, Chinese naval architects are becoming more proficient in designing ship hulls, compartment layouts, and propeller-rudder combinations that improve speed, efficiency and structural integrity.

Inefficiency is another pressing problem. Many of China's 800 shipyards are underutilized. A typical Chinese yard employs 9,000-12,000 workers, but these workers are not always kept busy. Poor management, corruption, lack of technical knowledge and political mandates to use particular suppliers undermine operations. In recent years, Beijing has been trying to reform the industry's structure by merging yards and making administrative changes.

Joint ventures between the developing Chinese shipbuilding industry and established Japanese and Korean yards will inevitably transfer technology, engineering skills and production know-how to Beijing. Hundreds of Chinese engineers are being trained by their Japanese and Korean partners. Such transfers are a prerequisite for doing business with any state-owned enterprise in China. Both Japan and South Korean shipbuilders were able to make dramatic improvements in productivity, running as high as 15 percent a year, in their earlier periods of development. With a strong commitment to the industry from Beijing and the inflow of foreign knowledge, it can be expected that Chinese shipyards will also make great strides over the next 5-10 years.

1) What is the China’s position in the shipbuilding industry in terms of gross tonnage?

2) Can the shipbuilding industry support the national economics?

3) Does the U.S. take the leading place in maritime trade?

4) Are there in China any obstacles to take full advantage of the opportunities offered?

5) What are the prospects of China’s shipbuilding?

6) Is the collaboration with other shipbuilding nations competitive or helpful for Chinese shipbuilding industry?

VOCABULARY

25. Practice saying the following words.