China’s cruise liner breakthrough marks crowning glory, but ambition to climb high-value chain faces challenges

In the first four months of the year, China accounted for 44.9 per cent of global output, 65.5 per cent of new orders and 51.3 per cent of orders on hand in terms of deadweight tonnage – a measure of how much a ship can carry – according to the China Association of the National Shipbuilding Industry.

China delivered 48 per cent of the world’s merchant ships last year in terms of compensated gross tonnage – a measure of the amount of work involved in building a ship – with South Korea accounting for 25 per cent, according to British shipping market analyst Clarksons Research.

The order book backlog at Chinese yards is estimated to be US$132 billion, the firm’s managing director Stephen Gordon said, while South Korean yards are sitting on orders worth US$107 billion.

But South Korea still has “the largest market share and a very strong position in LNG, although the Chinese share has been growing in the past 12 months”, he said.

“Korea is also stronger in (liquefied petroleum gas carriers). Traditionally, Korea had a very strong tanker position, but the gap has narrowed and in order book terms is closer.

“China has developed a position in cruise (ships), although mainly for smaller luxury vessels, where there is stronger demand at present.”

Chinese shipyards have been promoting breakthroughs in building various types of vessels in recent months.

Four 93,000 cubic metre ammonia carriers – the world’s largest of the type and the first for China – are being made by the Shanghai-based Jiangnan Shipyard after it received orders from the Singapore-based Eastern Pacific Shipping, the two companies announced early last month.

At the end of March, a 155,000-tonne dynamic positioning shuttle tanker – China’s first Suezmax vessel of its type – was also delivered by Dalian Shipbuilding Industry.

“China has made breakthroughs in many types of ships, not just because it has caught up in building capability, but also because its outstanding performance over the past years has improved domestic and international shipowners’ confidence in Chinese shipyards,” said Penny Peng, senior business development executive at vessel valuation and information analysis firm VesselsValue.

“They are now willing to have a try in China.”

According to Peng, around 1,900 merchant ships have been delivered globally so far this year, with around 900 built by Chinese shipyards.

The number of Chinese-made high-valued-added types, such as LNG and liquefied petroleum gas carriers, has also increased significantly, Peng added.

China’s future, she said, lies not only in the improvement of its building capacity but also in the development of a complete industry chain.

“The point is whether it can stop relying on imports for key equipment, so that shipowners’ confidence in China-made equipment will improve,” Peng said.

China’s high-end manufacturing drive also saw it recently debut its first domestically developed narrow-body passenger jet – the C919 – which took its maiden commercial flight at the end of May.

China has high hopes that the C919 will reduce dependence on foreign technology as ties with Western countries deteriorate.

It is designed to compete with Boeing’s 737 and Airbus’ A320, however, most parts used for the C919 are imported from foreign manufacturers, including the engine, avionics, control systems, communications and landing gear.