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Capt. Wei Jiafu, Chairman, China Shipowners’ Association

China: Latest and Future Developments

China’s shipping and related industries are among the first and fastest sectors to benefit from ‘opening up’ following WTO accession

More than one year has passed since China entered the World Trade Organisation. During this time great changes and developments have occurred in China’s economy and trade, through all sorts of industries. Here I will review briefly the developments in China’s shipping industries, and then discuss their trends for the future.

Developments in China’s shipping industry in 2002
International seaborne trade maintained healthy growth. Following China’s entry into the WTO, customs tariffs on cargoes have been widely reduced. Foreigners are able to enjoy more favourable polities, thanks to the expanded implementation of ‘opening-up’ policies.

China’s economy continues on a healthy track. Overseas funds have continued to flow into the nation, and experts expect that the total foreign investment is likely to hit a record high of US$50bn in 2002. China has actually become one of the most attractive nations worldwide in terms of actual use of foreign investment.

Building trade: WTO and new regulations are opening up China

In the meantime, WTO membership allows China to receive the status of Most Favoured Nation (MFN), with its products benefiting from the principles of the multilateral, non-restricted and stable terms among the 142 member nations. The treatment boosts both China’s foreign trade and seaborne trade. Latest statistics show China’s total foreign trade volume last year surged 21.8%, reaching US$620bn for the first time, among which exports rose 22.3% and imports 20.5%. The country’s international seaborne trade increased by 14% in 2002 to 736m tons, of which imports were up by 16% to 416m tons while exports were up 13% to 320m tons. In 2002, China’s container trade volume soared by 42% to a record high of some 30 million TEU. Imports on iron ore increased dramatically by 21% to 112m tons, while crude oil imports registered 69m tons, an increase of 15% on the previous year.

China’s shipping industry has become a widely-opened and deeply competitive industry. Chinese government authorities encourage foreigners to invest in the maritime and logistics industries in compliance with the commitment to WTO rules. In 2002, quite a few major shipping liners continued to expand their businesses in China, not only increasing the service coverage and deployment of additional slot capacities, but also speeding up their investment in inland areas and river ports. There are now more than 20 foreign lines, across a variety of business, operating firms in China. More than 60 foreign-funded companies have already launched international service routes directly connected with ports of the mainland, accounting for a market share of more than 65%. In the logistics industry, Maersk Logistics has established up to 15 subsidiaries or branches in China. NYK followed suit, setting up 16 subsidiaries and 17 branch offices. It is obvious to all that China’s shipping industry has become a widely-opened and deeply competitive industry.

Shipping policy is becoming more regulated, open and transparent, and the legal environment of the shipping industry is improving. In order to regulate international maritime transportation, to fulfil the commitments of our country’s accession to the WTO, to maintain market order within international maritime transportation, and to protect the lawful rights and interests of various parties involved in international maritime transportation activities, the Chinese government has promulgated ‘Regulations of the People’s Republic of China on International Maritime Transportation’ (hereafter referred to as ‘the Regulations’, which came into effect on 1 January 2002. The Regulations are necessary administrative regulations accompanying Chinese maritime law, and are highly significant for Chinese international maritime transportation market management to move towards standardisation and legal clarity.

First, they regulate market access procedures, reducing administrative examination and approval items enormously (cancelling more than 10 of the original 24 examination and approval items), cancelling or reducing non-essential limitations to market access. Second, all commitments related to maritime transportation services from China’s accession to the WTO are presented in the Regulations, written down in the form of provisions, realising the WTO’s national treatment and public, transparent principles. The legitimate rights and interests of foreign shipping companies in China are protected by law.

Thirdly, the Regulations make prohibitive stipulations against unjust competition behaviour in the maritime transportation market, important for the establishment of an international maritime transportation market with national unification, fair competition and standard regulation.

FDI: China encourages foreign investment in logistics

Future development trends for China’s shipping industries
The Chinese shipping industry and other related industries will continue to open to the outside world, which will lead to more and more intense market competition. By 2005, with the end of the transition period after China’s entry into WTO, Chinese service industries will have stepped into a new age of openness. National treatment will be granted to foreign-invested enterprises, with various restraints for market entrance removed, and policies more transparent. As a part of the Chinese service sector, the shipping industry and other related industries will certainly attract more foreign investments or additional investments, and market competition will become more intense. With respect to port management systems, reforms will be carried out to separate the functions of the government from that of business enterprise. Foreign investors will be further encouraged to participate in the construction and management of port facilities. Moreover, the first ‘Port Law’ in China is expected to be issued this year.

Supervision of the market by the Chinese government will become increasingly mature and competition in the Chinese shipping industry and other related industries will be better regulated. According to our promises for entrance into WTO, and the requirements put forward as part of the new trends of opening to the outside world, the Chinese government is accelerating the change of governmental functions and working styles, continuing to improve the legal and policy environment for foreign investment, so as to comply with WTO rules, international regulations and our promises to the world, and to carry out government functions abiding by laws.

The Chinese shipping industry is among the first to open to the outside world at such a rapid pace. The Ministry of Communications in China has accumulated plenty of experience through the fulfilment of industrial management. Therefore, with the improvement of our national comprehensive macropolicy, law and regulations, the supervision launched by the Chinese government on shipping and related industries will be more in line with our national situation and international rules. We will have a fairer and opener market to compete with one another.

The success of the 16th National Congress of CPC lays a good foundation for the development of Chinese shipping industry and other related industries. In November 2002, the 16th National Congress of CPC was held. During the meeting, following serious analysis of the domestic and international situation, our grand objective of “Building a well-off society in an all-round way” was put forward, together with a series of guaranteeing measures and working requirements. The success of the 16th National Congress of CPC lays a good foundation for the long-term, steady, healthy and rapid development of the Chinese economy. Furthermore, Chinese tariffs will be further decreased over several years, and non-tariff barriers will be lessened continuously. Thus extensive market scope will be provided for foreign trade with China and the steady development of shipping markets.

Strengthening cooperation
In short, as a formal member in WTO, China has performed well in the past year. Chinese government will actively continue to promote freedom and convenience, to establish a more deregulated, fairer and more reasonable system in multilateral trade and investments. The China Shipowners’ Association is willing to do everything it can to strengthen cooperation with shipping communities in other parts of the world, to help build the bridge of mutual trust and understanding among business counterparts, while continuing to promote and deepen mutual exchanges and friendship in an attempt to maintain the sustained and healthy development of the global shipping industry.

Capt. Wei Jiafu,
Chairman, China Shipowners’ Association.

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