China's shipbuilding tonnage is expected to reach a record high of more than 12.5 million in 2005. This represents 17 per cent of the global shipbuilding market, up from 14.3 per cent in 2004. Growth of China's shipbuilding tonnage will account for most of the global growth, which will increase to 71.2 from 61.4 million in 2004, according to Zhu Rujing, an analyst with Beijing-based China Shipbuilding Economy Research Centre.
Despite the rapid growth, China will continue to be the world's third biggest shipbuilding country following Japan and South Korea. Both Japan and South Korea now control more than 30 per cent of global shipbuilding market, while many Chinese shipyards appear short of capacity to satisfy the world's strong demand for new ships. However, there is a danger of overcapacity starting from the second half of 2008 because Chinese shipyards are developing on a massive scale, and growth of global ship demand will slow down. The analyst estimated that total shipbuilding capacity in China would exceed 30 million tons by 2010, up from nearly 14 million at present.
Shipbuilding giants from South Korea and Japan are accelerating penetration into China, with some hoping to gain controlling stakes in Chinese shipyards, and even build wholly-owned shipyards. But it is expected that China might ban foreign shipbuilding groups from doing this, with an anticipated new policy on the shipbuilding sector.