China Now The Biggest Shipbuilder On The Planet
China has now surpassed South Korea as the world’s largest shipbuilder. China has 34.7 percent of the world market. Since 2000, South Korea has had the largest share of the world shipbuilding market after taking the lead from Japan.
China has invested significant resources into expanding its merchant shipbuilding industry, as a way to improve its warship building capability. Three years ago, China produced about a quarter of the world’s merchant ships, while South Korea was in first place, producing about a third. It was then believed that China would take first place in the next 5-10 years.
The big thing holding China back in the warship building area was the shortage of skilled personnel. By encouraging merchant shipbuilding, the government creates experienced ship builders for the more complex task of building warships. In most cases, merchant ships are larger than warships, and much less complex. For example, a common type of merchant ship is the VLCC (Very Large Crude Carrier) of 300,000 deadweight tons (DWT). This is the largest size tanker than can use the Straits of Malacca to carry oil from the Persian Gulf to East Asia. These ships haul two million barrels (about 290,000 tons) of oil per trip. These ships are larger than the biggest American aircraft carriers (like the Nimitz class, that are 110,000 tons displacement, and nearly 1,100 feet long.)
The major difference between merchant vessels and warships is what equipment they have. Merchant ships are quite basic and plain. A 300,000 DWT VLCC is about the same size as a Nimitz class carrier, but costs much less to build ($130 million for the VLCC, versus over $4 billion for the carrier). Actually, it costs more to run a carrier for one year, than the VLCC costs to build. Part of that has to do with crew size, with the carrier having a hundred sailors for everyone needed to run the VLCC.
By building all those merchant vessels, China has acquired the ability to build the basic warship hull. Where it has big problems is in creating the complex electronics, mechanical systems and weapons needed to make a warship work. China is making progress there as well, but not nearly as much as it has in the ship building area.
China grabbed the lead in market share for commercial shipping partly because it became more difficult for South Korean builders to expand. There were more restrictions on land use in South Korea, in addition to higher labour costs. South Korean builders, seeing that they could not match the expansion of Chinese ship yards, expended more effort on building more complex, and expensive, ships. Japan was following a similar path when it lost the lead to South Korea a decade ago. China also gained more market share by offering generous loan terms to foreign buyers of Chinese ships, and cheap loans for their own shipbuilders.
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