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Marine Log

September 6, 2007

China plans shipyard licensing system

The Chinese government is moving to gain better control of the continuing expansion of shipbuilding capacity.

Last year, the State Council of the People's Republic set specific targets that would see the industry reach an output of 17 million dwt and a capacity of 23 million dwt by 2010 and an output of 22 million dwt and capacity of 28 million dwt by 2015.

However, investors have been so eager to get a slice of the Chinese shipbuilding pie that industry capacity could exceed 40 million dwt annually by 2010 if all the plans that are currently in the works come to fruition.

Yesterday, however, according to Shanghai Security News, the Commission of Science, Technology and Industry for National Defense, the sector's main watchdog published a draft of a Shipbuilding License Management Law.

The licensing system is planned to encourage Chinese shipyards to adopt advanced equipment and technologies, as well as modern management methods.

According to the Xinhua-published China Securities Journal, the licensing system is "an attempt at improving ship quality and security, promoting environmental-friendly production, eliminating out-dated production capacities, and optimizing and upgrading the ship industry structure."

However, withholding licenses would also serve as one way of keeping expansion under control.

According to the draft, shipbuilding licenses fall into two main categories: manufacture (including ship reconstruction) and maintenance. There is also further detailed classification in terms of ships' usage and building materials.

The draft stipulates that enterprises without shipbuilding licenses are prohibited from production. Those using faked or manipulated licenses or submitting false application materials for a license will be fined between 100,000 yuan (US$13,247) and 500,000 yuan. Their illegal income will be confiscated and their direct principals will be fined 20,000 yuan to 100,000 yuan.