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Chinese Shipbuilding Remains Strong in Tough Economic Conditions
Feb 03, 2010

Supported by various factors such as cheap labor, stimulus packages offered by the government, rising domestic demand, etc., China enjoys growth in its shipbuilding sector.
 
Notwithstanding the global financial meltdown, the shipbuilding industry in China grew rapidly in 2009. According to the statistics released by the Ministry of Industry and Information Technology (MIIT), the shipbuilding industry witnessed a gross output value of 548.4 Billion Yuan (US$ 80.34 Billion) in 2009, a year-on-year increase of 28.7%, as per the news published by Alibaba.com.
 
Moreover, compared to the 2008 figures, the share of China's new orders and order books in 2009 was 61.6% and 38.5% respectively of the world's total, posting corresponding increase of 23.9% and 3%. Furthermore, according to a market research report titled “China Shipbuilding Industry Forecast” from RNCOS, China’s total order book for shipbuilding is expected to account for around half of the global order book by the year 2012.
 
Availability of cheap labor is proving a boon for the shipbuilding industry of China. Even after including the productivity differences, labor cost in the country is much lower compared to that in Japan and Korea. Yet another factor that has been supporting the industry is the rising domestic demand as a result of foreign trade, due to which the shipbuilders in China have managed to survive the recent financial catastrophe.
 
In addition, the government has also lent its full support to the country’s shipbuilding industry during recession, thereby serving as a booster. To help this emerging sector ride out the tough economic situation, the Chinese government, in February 2009, announced a stimulus aid. Besides this, it also encouraged the financial institutions to provide incentives to the buyers of ocean-going ships as well as to lend increasingly to ship purchasers.
 
It is to be noted that China’s order books and new orders for the first time outperformed South Korea in 2009 to become the world leader. In new orders, the Korean shipbuilders last year gained a total of 3.15 Million CGTs (Compensated Gross Ton), while shipbuilders in China grabbed 3.49 Million CGTs.
 
According to a Research Analyst at RNCOS, “Even though China succeeded in becoming the world leader in the shipbuilding industry, still in order to remain competitive in the world market, the Chinese government is required to support the oceanographic engineering equipments, high-tech ships and the research on main corollary equipments in near future.”
 
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