China Bans Foreign Vessels from Waterways

Bloomberg reports China is banning foreign vessels from sailing on its domestic waterways, which are among the busiest in the world. Amid the economic slowdown, the shipping industry was hit by a contraction in trade:

Overseas investors will also be barred from engaging in river shipping, including through the use of Chinese vessels, according to a statement posted on the government’s website yesterday. The ban, which comes into effect Jan. 1, doesn’t apply to vessels registered in Hong Kong, Macau and Taiwan.

The new rules are designed to help promote a “healthy” domestic shipping sector and to ensure safety standards, according to the statement. The government also this month announced tax and financial support for local shipping companies after China Cosco Holdings Co. (1919) and China Shipping Container Lines Co., the nation’s largest listed operators, both posted wider first-half losses.

Shippers will be able to seek exemptions from the transport ministry for using foreign ships if there is a capacity shortage, according to the statement. Otherwise, companies found to be using overseas vessels on rivers will face penalties including fines of as much as 1 million yuan($160,000), it said.

About 1.5 billion tons of cargo were shipped along the Yangtze in 2010, China Daily said in May 2011, citing the Changjiang (Yangtze River) Administration of Navigational Affairs. That’s more than three times the amount carried on the Mississippi River, it said. The river runs 6,300 kilometers (3,915 miles) to Shanghai from Tibet.

As China prohibits overseas investors from sailing the domestic rivers, the ban also includes Chinese companies use of foreign ships, from Reuters:

China is to prohibit domestic companies from operating foreign-made ships on domestic waterways and will block foreign shipping service firms from selling services in China, according to regulations issued by China’s State Council.

Foreign shipping service enterprises are also banned from hiring Chinese ships or shipping space, “or using other means to covertly operate waterway transport services”.

Chinese operators are also restricted from using foreign boats, unless there is a shortage of Chinese ships and the company gets permission from the State Council.