China is ready to introduce a licensing system for ship building in a bid to phase out inefficient facilities and promote the upgrading of the industry, Wednesday's Shanghai Securities Journal reports.

The newspaper said the State Commission of Science and Technology for the National Defense Industry on Tuesday issued an announcement to solicit opinions and suggestions on draft regulations regarding licensing management for shipbuilding.

The drafted rules stipulate that enterprises without a specific license will not be allowed to engage in shipbuilding.

The government encourages shipbuilding enterprises to employ state-of-the-art technologies, use advanced equipment and adopt modern management expertise. Efforts are also encouraged to phase out old-fashioned production facilities and restructure the industry, the regulations say.

They also stipulate that enterprises which forge ship building licenses and obtain production permits with bogus documents and by other fraudulent means should be fined from 100,000 yuan to 500,000 yuan (13,228 to 66,138 U.S. dollars). People who are directly responsible for the illegalities should be fined from 20,000 yuan to 100,000 yuan.

According to the newspaper, China's shipbuilding output reached 7.55 million dwt (dead weight tons) in the first half of 2007, a growth of 43 percent on last year's same period. Of the total, 6.26 million dwt, or 83 percent, were for export.

In the first six months, China received shipbuilding orders involving 42.62 million dwt, up 165 percent. Of the total, 39.13 million dwt, or 92 percent, were for export.

Major Chinese ship building enterprises realized 101.7 billion Yuan in total industrial output value between January and June, up 48 percent. Their combined profits edged up 151 percent to 6.4 billion yuan.