Business Week reported that a group of state owned Chinese shipping companies have placed USD 4.5 billion order for 50 supertankers throwing a financial lifeline to China's struggling shipbuilders.
The order adds to a multibillion dollar flurry of investments by state companies in recent weeks a key element in Beijing's carefully controlled effort to reverse a painful economic slump. The government has approved a wave of spending on new steel mills subway lines and other corporate and public works projects.
The move also could help China, the world's biggest energy consumer, gain more control over its energy supply chain by owning the giant ships needed to import crude from the Middle East and elsewhere.
The 21st Century Business Herald said that the supertankers were ordered by three of China's biggest shippers, China Shipping Group, Dalian Ocean Shipping Company and China Merchants Group. It cited the president of China Shipping and the general manager of Dalian Ocean Shipping.
Employees who answered the phone at the press offices of the three companies said they could not confirm the report or give other details such as where the tankers would be produced.
Chinese shipyards, which are the world's biggest shipbuilders by total tonnage have been among the hardest-hit industries in the slowdown. Orders have fallen by more than half and shipyards are cutting jobs.
Mr Xia Xiaowen an analyst for the China Shipbuilding Economy Research Center said that "Small and medium size shipbuilding companies are either out of business or near bankruptcy. If the reports of new orders are accurate, "it will definitely be good news for those large manufacturers, and they don't need to worry about survival anymore."
China's economic growth fell to 3 year low of 7.6% in the 3 months ending in June. That is healthy by the standards of the United States and Japan, where this year's growth is forecast in low single digits but painful for companies that need higher growth to drive demand for new ships, factories and other assets.
Some Chinese industries such as retailing and other services are relatively strong helping to reduce politically dangerous job losses. But fields such as shipbuilding and production of steel, cement and solar panels have been hit hard by weak demand and excess production capacity. The country's biggest steelmaker, Baosteel Group announced it was shutting down a mill in Shanghai due to weak demand.
Source - Business Week
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