GT Voice: Probe of China’s shipyards sign of American peers’ bleak future

File Photo: VCG

File Photo: VCG

The Biden administration seems to see cracking down on the Chinese shipbuilding industry as a panacea for struggling shipyards in the US. However, isn’t the idea of forcing China to take the medicine for what ails the US merely further evidence of the bleak future of the American shipbuilding sector?

A Sunday report by the Financial Times, citing industry insiders, said that the US investigation into the Chinese maritime, logistics and shipbuilding industries, which could lead to duties for Chinese-built ships calling at US ports, may help shipyards in South Korea and Japan, but will probably do little to boost US shipyards.

Professionals in the shipbuilding and maritime industries could easily see the absurdity of the US fantasy to revive its dormant shipyards by attempting to suppress China. Even if the US were to cause Chinese shipyards to lose orders through port charges, it would not benefit the struggling US shipbuilding industry. Instead, it would only lead to higher maritime trade costs for the US. 

The fact that even American shipowners are reluctant to place orders at home is sufficient evidence to indicate the lack of competitiveness of the industry. For nearly 100 years, a federal law known as the Jones Act has restricted water transportation of cargo between US ports to ships that are built by American shipyards. 

According to Clarksons Research, American shipowners own about 3,000 Jones Act vessels, with an average age of 23.7 years, compared with the global fleet average of 12.7 years. 

Due to high costs, American shipowners have been slow to update their fleets, with more than half of the vessels being more than 25 years old, and 700 vessels even being more than 50 years old.

Against this backdrop, instead of trying to improve its industrial competitiveness, the US is trying to contain China’s manufacturing, a typical display of its hegemonic mindset. 

But the decline of the American shipbuilding industry cannot be reversed through protectionism or repression of others. The rise of China’s shipbuilding industry is an indisputable fact, which has been verified by the market. In 2023, China’s shipbuilding output climbed 11.8 percent year-on-year, accounting for 50.2 percent of the world’s total, while new orders surged 56.4 percent, taking up 66.6 percent of the world’s total, according to data from the Ministry of Industry and Information Technology.

By comparison, US commercial shipbuilding capacity is only 0.13 percent of the global total, according to the US Naval Institute.

It is regrettable that the success of China’s shipbuilding industry may have pricked some sensitive nerves in the US, leading to the accusation about China’s “unfair, non-market policies and practices.”

While there is nothing we can do about reviving the US shipbuilding industry, the fact that the decline has lasted for several decades may help relax the nerves of some people. How much worse could it be?

Let’s clarify a few more facts. The decline of America’s shipbuilding industry began in the 1980s, when American shipyards became dependent on government orders as the Reagan administration ended the commercial shipbuilding subsidy program in 1981. The 1980s saw the US shipbuilding industry shed 40,000 jobs, with the collapse of the commercial sector, according to Marine Link.

After that, Japan and South Korea dominated the global shipbuilding market for many years. It was not until 2010 that China’s shipbuilding sector became a rising star in the global market. 

Is blaming China a tactic the shipbuilding industry uses to get government support? Don’t industry players know how obsessed politicians in Washington are with the new topic of suppressing Chinese manufacturing and how evasive these people are about solving real industry problems?

This distorted attitude, which persists from the government to the industry, is perhaps the root cause of the downfall of the American shipbuilding sector. No one is willing to confront the real problems and find solutions, leading to an inevitable and self-inflicted decline in the industry.

Let’s see if the US strategy of blaming China can revitalize the industry. However, it is highly likely that this will negatively affect the US shipping industry. Ultimately, the key to treating an illness lies in finding the right remedy, not in paranoia and blaming others.

Tourism in third-, lower-tier cities set to boom over May Day holidays

Photo: Courtesy of Beijing Daxing International Airport

Photo: Courtesy of Beijing Daxing International Airport

Chinese third- and fourth-tier cities – and even smaller ones – are set to be popular during the upcoming May Day holidays, per industry data, as market watchers said the trend shows that China’s tourism market is steadily recovering, which will further boost consumption. 

According to data from Ctrip, China’s online travel agency, domestic long-distance travel bookings account for 56 percent of total orders during the May Day holidays, with many tourists opting for lower-tier cities as their destinations. Hotel bookings in county-level markets have seen a year-on-year increase of 68 percent, while orders for scenic spot tickets surged by 151 percent.

Driven by concerts, music festivals and social media accounts of local authorities, third-tier and lower-tier cities have seen a surge in popularity. Data from Tongcheng Travel show that compared with core cities, there has been a relatively larger increase in demand for train and plane tickets to third-tier and lower-tier cities during the upcoming holidays.

The hotel booking index for third-tier and below cities has increased by 76 percent year-on-year, nearly a threefold increase compared with 2019. The popularity of train and plane tickets to third-tier and below cities during the May Day holidays has increased by more than 360 percent on a week-on-week basis, according to Tongcheng Travel.

Changing consumer habits could be one of the reasons, which means people are shifting away from crowded popular cities and attractions toward places with unique natural landscapes and local customs, Wang Jinwei, an associate professor at the Tourism Sciences Institute of Beijing International Studies University, told the Global Times.

 

Driven by the rural revitalization strategy, efforts to promote rural civilization have created a favorable cultural environment, and this trend has brought more popularity to rural regions, Wang explained.

Zhang Zonggang, a Beijing resident, told the Global Times she plans to visit Mangshi, a city in Southwest China’s Yunnan Province, with her relatives during the coming holidays. “We prefer to avoid crowded places as we’ll be with children and are seeking to experience the leisurely and tranquil lifestyle of the small town. It’s also cost-effective compared with the first-tier cities.”

Market watchers said that rising travel demand in third- and lower-tier cities will boost consumption.

China’s GDP grew by 5.3 percent in the first quarter of 2024, well above market expectations as the world’s second-largest economy got off to a robust start. Data from National Bureau of Statistics showed that retail sales grew 4.7 percent year-on-year to 12.03 trillion yuan ($1.66 trillion) in the first quarter.

The popularity of tourism in third-tier and lower-tier cities will not decline; instead, it will become a major trend for Chinese tourists, said Deng Ning, a vice dean of the Tourism Sciences Institute at Beijing International Studies University.

German firms grow with China

As China’s economy continues to develop and more favorable policies are introduced, many German enterprises are keenly interested in its market advantages and improving business environment. They vow to invest more in China and grow together with the country.

According to the business confidence survey for 2023 and 2024 by the German Chamber of Commerce in China, about 78 percent of German companies expect growth to be consistent in China in the next five years, while 54 percent plan to increase investments in the country.

The Beijing China-Germany Industrial Park, the first national-level park that focuses on Sino-German economic and technological cooperation, has more than 100 German companies, including Fortune 500 firms as well as hidden champion companies.

Join us together with our British host Alexander Long as we explore the industrial park.

China’s NEV sector off to strong start in first quarter

This photo taken on Feb 24, 2023 shows the assembly line of GAC Aion, an NEV subsidiary of Guangzhou Automobile Group Co., Ltd. (GAC Group), in Guangzhou, south China's Guangdong Province. Photo: Xinhua

This photo taken on Feb 24, 2023 shows the assembly line of GAC Aion, an NEV subsidiary of Guangzhou Automobile Group Co., Ltd. (GAC Group), in Guangzhou, south China’s Guangdong Province. Photo: Xinhua

A number of Chinese new-energy vehicle (NEV) brands saw their shares continue to rise on both US and Chinese bourses on Tuesday after they posted strong sales figures for March. 

Chinese experts believed that the strong sales performance of some leading NEV brands in March reflected the strong momentum in the further upgrading of China’s manufacturing industry. The strong exports performance, despite headwinds, also reflected the competitiveness of Chinese NEVs, they noted.

Private enterprises continue to demonstrate their innovative capability, reflecting the resilience of the Chinese economy and recovering confidence of private enterprises, analysts pointed out. 

Looking forward, experts believe that China’s NEV sales will continue to post strong gains, with an expected high growth rate of around 20 percent in the first half of the year.

BYD, China’s biggest electric vehicle (EV) maker, reported a 46.1 percent year-on-year rise in its March sales on Monday with 302,459 units sold. For the first quarter, the company sold 626,263 NEVs, up 13.44 percent.

China EV makers Nio, Li Auto and XPeng also reported March and first-quarter deliveries on Monday, meeting or just exceeding low expectations, according to media reports.

The strong sales posted by these brands were accompanied by news of the impressive entrance into the market by new brands such as Chinese smartphone and electronics maker Xiaomi.

The company, having debuted its SU7 electric car last week, now had bookings reaching 40,000 units, with backlog orders piled up for as long as eight months, according to media reports on Tuesday.

Under the spotlight of investors and global media outlets, the robust booking data send the company’s shares up 8.97 percent to 16.28 Hong Kong dollars ($2.08) per share at the Hong Kong bourse on Tuesday. Xiaomi’s market value during intraday trading once reached $7.6 billion, surpassing both GM and Ford, according to Reuters.

Some observers hailed Xiaomi’s successful debut into an already crowded scene featuring fierce competition as one more example of the daring entrepreneurial spirit of the Chinese private sector companies and a demonstration of recovering confidence by private companies.

The China Passenger Car Association (CPCA) said on Tuesday that it expects NEV sales to top 820,000 units in March, an increase of 33 percent year-on-year. Month-on-month, the increase is equal to 84 percent.

According to estimates by a CPCA executive, China’s NEV sales accounted for 62 percent of global NEV sales in January and February, the Securities Times reported. 

“As one of the tech-intensive and green ‘new three’ items, the robust growth of the NEV sector is an indication that the Chinese economy is off to a good start in the first quarter,” Li Chang’an, a professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times on Tuesday.

In a sign of a further recovery in manufacturing activity, China’s official manufacturing purchasing managers’ index returned to expansion range with a reading of 50.8 in March after running below 50 for five consecutive months, data from the National Bureau of Statistics showed on Sunday.

“The stellar performance of the sector signals China’s global competitiveness when it comes to technology and innovation has further strengthened amid the nation’s broader plan to develop new quality productive forces,” Li said.

“China’s NEV market is a highly competitive sector and the performance by leading NEV brands underlined the resilience of China’s industrial upgrade,” Wu Shuocheng, a veteran automobile analyst, told the Global Times on Tuesday.

“Against protectionist headwinds in some markets, the competitiveness of Chinese companies remained strong,” Wu said.

As the Chinese economy continues to recover, Wu expected NEV sales to register a 20 percent year-on-year growth for the first half of the year with overall sales of passenger vehicles growing by around 5 percent.

Analysts also urged the US and the EU to stop their crackdown tactics against China’s new-energy industry, including the NEV sector, as Chinese NEVs are a contributing, not an undermining, factor for their climate goals.

Protectionist measures taken against Chinese EVs will not improve their competitiveness for their respective auto industries and will undermine their efforts in realizing climate goals, Li said, noting that the noises of decoupling on NEV could not obstruct the rise of Chinese NEV, which is driven by market competition, devotion to innovation and supply chain advantage.

The US and the EU should seek cooperation with China on NEVs so as to tap the great complementarities, rather than taking a protectionist path, analysts said.

IDC: China’s GenAI sector investment surges, projected to reach $13 billion by 2027

AI Photo: VCG

AI Photo: VCG

Driven by rapid technological advancement, China is expected to see a compound annual growth rate (CAGR) of 86.2 percent for generative artificial intelligence (AI) investment between 2022 and 2027, according to a newly released report from Research firm IDC, showcasing the robust prospects of the country’s high-tech sector.

Thanks to the government’s rising efforts to accelerate high-quality development, China’s generative AI spending is set to reach 33 percent of the world’s AI investment by 2027, up from 4.6 percent in 2022 with the generative AI investments probably reaching $13 billion, according to the report.

China’s performance is outstanding amid overall global growth in the industry, which is projected to reach $512.42 billion by 2027, with a CAGR of 31.1 percent, IDC forecasted in its Worldwide Artificial Intelligence Spending Guide.

The report also underscored China’s leading position in AI investment within the Asia-Pacific region, surpassing half of the total investment in the region. As of 2027, China`s AI investment is set to exceed $40 billion, representing a CAGR of 25.6 percent. 

Generative AI is poised to become a pivotal technology in enterprise automation. Banking, retail, software, and information services are cited as the top three spenders driving its innovation and growth, collectively constituting nearly a third of the market, according to the report.

Since 2014, China’s AI development has been accelerating, driven by the surging application demand within the domestic market. According to an official with the Ministry of Industry and Information Technology (MIIT), China’s AI industry output value reached 580 billion yuan ($80.23 billion) in 2023, up 18 percent year-on-year. The number of major AI-related enterprises has exceeded 4,400, ranking second in the world.

China’s AI development has been rising rapidly amid the government’s ramped-up efforts to develop new quality productive forces. The country has announced a slew of plans to enhance industrial innovation, and accelerate AI-driven manufacturing, led by large language models, to speed up the establishment of a modern industrial system, an official from MIIT said recently.

Global Times