China has extended a subsidy program that encourages shipping companies to scrap old vessels by two years. The move is a bid to support an industry struggling to emerge from a global downturn.
The scheme, which began in 2013 and was due to end this year, gives shipping lines grants of 1,500 yuan ($241.67) per gross ton to replace old vessels with newer, more environmentally friendly models.
These subsidies helped state-backed shippers including China COSCO and China Shipping Development to post a higher 2014 profit despite the slump in the global industry. China COSCO said it would have posted a loss had it not been for the subsidies.
"The shipbuilding and shipping industries are facing a very difficult downturn, the scheme's extension reflects their needs," said Zhang Shouguo, executive vice-chairman of the Chinese Shipowners' Association.
The scheme's extension to end-2017 was announced in a joint statement by the Ministry of Transport, the Ministry of Finance and the National Development and Reform Commission.
China's economic slowdown has squeezed the global shipping industry, which has been stuck in a rut since 2008, partly due to an excess of vessels ordered before the financial crisis of that year, which has pushed freight rates down to historic lows.
New orders at Chinese shipyards plunged 77 percent year-on-year in the first three months of 2015, the China Association of the National Shipbuilding Industry said in April.
