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Chinese-flag fleet's capacity set for big increase soon
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08:18, November 23, 2007

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Twenty-five Chinese ships flying foreign flags of convenience will register with the country's shipping administration soon, giving it better command over maritime transport.

Many Chinese ocean-going vessels have registered abroad to avoid paying the relatively higher taxes at home and cut the overall cost of transportation, and thus fly foreign.

But after the government adjusted its maritime taxation policy, granting tax exemptions from July 1, many ocean-liners have vowed to register at home.

The 25 ships, the first such batch to register domestically, will add 1.02 million deadweight tons (dwt) to the Chinese-flag fleet's capacity, the director of the international shipping administration division of the Ministry of Communications, Xiong Wei, said yesterday.

"In the next two years, the policy is expected to bring more vessels back to the Chinese-flag fleet and increase its capacity by at least 4 million dwt," Xiong said.

According to the ministry's figures, 1,920 ships fly the national flag now and have a capacity of more than 24 million dwt.

If the total number of vessels owned by Chinese but registered abroad are taken into account, China would have the fourth largest fleet in the world in terms of dwt, says a report of Germany-based International Shipping Logistics.

Chinese-owned merchant ships flying foreign flags account for more than half of the total deadweight tonnage of Chinese fleets.

The percentage is common in the world because statistics suggest half of the world's international tonnage was registered under flags of convenience in 2000.

Many Chinese ship operators have registered their vessels overseas to avoid the 27.53 percent tariff and import value-added taxes on imported vessels. A number of them are expected to return home for registration.

But insiders say the number of Chinese vessels registering overseas is increasing with the expansion of merchant fleets.

Since the country's more than 90 percent foreign trade, and 95 percent crude oil and 99 percent iron ore imports relying on maritime transport, it's necessary to have a better command over ocean-going ships to ensure the economic safety.

To ensure that, the ministry announced in June that Chinese-owned ships registered overseas by the end of 2005 will be allowed to register at home - in Shanghai, Tianjin or Dalian - and will be exempted from customs duty and import value-added tax.

Source: China Daily

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