Last month COOEC successfully delivered a high spec DSV and IMR further adding capacity to an already depressed market. The only effect is that companies like who used to charter DSVs and IMR vessels in the region have now lost completely the chance for this work and these vessels will be offered at rock bottom rates when they are quiet domestically.
Given that it is cheaper, and will be for some time to charter vessels rather than own them, one wonders why construction on these vessels was started long after this became clear?
A good article here highlights the scale of the subsidies for Chinese shipbuilders and the effect this has had on the industry:
Given the conclusion:
[t]his calculation implies that a frequent assertion that China developed shipbuilding to benefit from low freight rates for its trade seems to be unsubstantiated. Indeed, the benefits of subsidies to shipping are minimal. Perhaps instead, the Chinese government is aspiring to externalities for sectors such as steel and defense, or even national pride …
[t]he results of my study suggest that Chinese subsidies dramatically altered the geography of production and countries’ market shares. Although price (and thus consumer) gains are small in the short run, they may grow in the long run as the operating fleet becomes larger.
It is hard not to see this as a move to ensure China moves up the value chain in the production chain for high spec vessels. Not good news for residual values long term I would suggest.