However, Cao Yousheng, deputy director of China Shipbuilding Economic Research
Center in Beijing, said the problem of overcapacity is not as urgent as the
government anticipates it to be.
"Most shipyards in China are operating at full capacity as they have received
plenty of orders, with many of them to be delivered in 2010," Cao said.
The shipbuilding sector will face overcapacity in real terms after 2010 as
the world's new ship market will keep thriving in the years to come, he said.
"I believe most domestic shipyards will be competitive at that time with low
costs and improving productivity anddevelopment capabilities."
He said China's ship production will reach 18-20 million deadweight tons this
year and top 30 million in 2009.
In the first quarter of this year, shipyards in China won new vessel orders
of 12.43 million tons, rocketing 67 percent from a year ago.
But according to China Association of National Shipbuilding Industry, there
will also be a serious glut in the global vessel market as a battery of foreign
countries are in a race to expand shipbuilding capacity, such as Japan, South
Korea, Russia, India, Brazil and Vietnam.
The association predicts total shipbuilding capacity in the world will reach
115 million deadweight tons in 2010, compared with 70 million in new vessel
demands by then.
Capacity in both Japan and South Korea will reach 32 million deadweight