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China's Ministry of Communications has announced it will offer tax exemptions to induce Chinese ships flying foreign flags of convenience to register their vessels in the country.
The goal is to expand China's flag fleet by four million deadweight (dwt) tons over the next two years, up from 1,920 ocean-going vessels with a capacity of more than 24 million dwt.
From July 1, Chinese-owned ships registered overseas by the end of 2005 will be allowed to register in Shanghai, Tianjin and Dalian. They will also be exempted from customs duty and import value-added tax for their ships, a top ministry official told the China Daily.
The move comes as the number of Chinese vessels registering overseas has been on the rise and now makes up half of China's total international tonnage. Vessels used on international trade routes are allowed to register in countries that offer an "open registry."
Vice-Minister Weng Mengyong said that the scheme to encourage vessels flying flags of convenience to register in China will lead to improved maritime security and better protection of national interests, adding that countries that offer flags of convenience do not usually have adequate safety supervision systems.
He said that currently cargo transported by sea accounts for more than 90 per cent of the country's foreign trade. "Lack of adequate safety supervision leads to poor shipping services," said Mr Weng.
The report noted that many Chinese ship operators opt for vessel registration overseas to reduce costs and bolster their competitive edge in the market, especially as imported vessels pay a 27.53 per cent tariff and import value-added taxes.
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