CHINA'S MERCHANT FLEET EXPANSIOIN SINCE 1971

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500230016-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 9, 2016
• Document Release Date: February 14, 2000
• Sequence Number: 16
• Publication Date: June 1, 1975
• Content Type: REPORT

nc~ wl~~'~l i ~une~
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Secret
Nn 1?iirril;a l~ii~~n1
China's Merch~rnt .Meet F.~ j~~rusir~~t .Since 1971
Secret
ER RP 75.16
June 1975
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosuro Sublact to Criminal Sanctions
CI~~~1/Nd by O16J1D
CM~mpl /rom p~n~r~l d~cl~s~I/1:~IMn ~cAWul~
o/ l.O. 11E64, ~~~mpibn cat~pory:
4 60(11, (Z1, end (J)
Aulorrollc~IM d~cl~~~ItNd on:
D~t? Impo~~IDI~ to D~I~rmM~
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 $ncrot
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CIIINA'S MI?ItCIIAN'1' 1~ 1.,1:1:'1' I~;XI'ANSIUN 'iINCI~: 1 x)71
SUMMARY ANG CONCLUSIONS
I. C'hina's international ntert:h;utl Ilcel is growing rapidly. Since the end
of 1971 it h;~s acynirecl ntorc than 2 million t!~adwcight tons (I)W'I'), enabling
the I'K(' lu carry a larger portion ol~ its I'orcign track ant) reduce ch;rrtcring costs.
Acquisitions have included the inlern;tlional Ilcct's first l;utkcrs ar:d hnik carriers,
accounting for SO'/~ ol? lltc new lonnat;c acquired.
'. Oscan shipping tonnage now cxcectls (, million I)W"('. The international
Ilcet antl its joint stock companies control about, '?.~) million I)W'I', while C'hina's
Ilong Kong 17ec1 owns another 1.4 million I)W'I'. The. coastal f7cet nuut;~ges the
rcntainint; 2.1 million UW7',
Z. ('hina is cauticnrsly movint; into r?cw shipping technologies.
('untaincrir.ation began with a limited China-Johan scrti?ice in 1973 antl expanded
with an additional service to the United States and Western I?uropc from Flong
Kong in 1974. "I'hrcc major PIZC ports now arc b~int, cc~uipped for handling
containers.
4. 'I'hc sham. of IyRC trade carried by Chinese ships increased from Iess than
10'/. before 197? to about one-third in 1974. h~ addition, the acquisition of
substantial tanker ;:nd bulk carrier tonnage has allowed the 17ect to carry a larger
portion of China's l;rowing petroleum exports as well as grain, ore, and fcrtilircr.
"I'he international lleet should approach 4 million I)WT by the end of the Fourth
Five-Yc;tr flan (1971-75), with tankers and bulk carriers accounting for more than
one-third of the total. 77tc role of the Ilong Kong Ilect vtiill dccainc as the
international ~`~cet expands and international restrictions on Chinese-flag ships arc
cased.
Note: Comments and queries regarding this publication arc welcomed. They may
be directed to of the Office of Economic Research, Code 143,
Ex tcrsion 7931. 25X1 A
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S. ('hinn's intcrnalionnl nicrchanl Ileel is cxpandint, rat-idly. Since the end
of 1971 it has acldat :rver 2 ;pillion UW'I' al a cost of 't;700-$f300 million.
Accpiisitions have inclt~dcd the fleet's first tankcrs* and bulk carriers, utnountin).
to nu-rc than one million I)W'1', ctr S(-%~ of the tunnat,~ acyuir~~d during lhi, pcriocl.
6. 'Che international flc~~t was formal in I ~)(~ I with two freighters lransfcrr~; r.1
from dotneslic service and one passenger ship acquired abroad. I~Icuf. growth ~N:,~s
steady during the. next decade, with the greatest expansion during Ic~~64-67, w!~~:~n
pct additions totaled a!xnit 300,000 I)W'1', and in 1970, when 200,000 UW'I' enlcr~ed
the fret. I3y the end of 1971 llte inlcrnational Ilcet Irul rcachc~d more il'uan
H00, 000 . )W'I'.
7. Acquisitions accelerated in 1972, reaching 276,000 UW'1', more than twice
the tonnage acquired i,~ 197{. I'urclt?.ises rontinucd in 1973 as another SS6,000
DW"I' entered flit Ileet, In 1974, new tonnage exceeded by 60'%~ the total added
in the previous two years as about 1.4 million 1)W'I' was purchased for the
international fleet. International fleet acquisitions during this pcriocl arc listed in
"i'ablc 1.
Krrlionale of Clrirrese /~%et /sxpassiurr
$. 'fhc Chinese arc expandinZ; their international fleet to cart!; a grcal:cr
share of their growing foreign trade anti to cut chartering costs. $~~foir 1972, the
fleet carried slightly less than one-fourth of the total in 1973 and abo.:.,: one-third
of trade in 1974. liowcvcr, as the fleet expands, severe shortages of shi'~1ed offic;crs
and crews arc becoming evident.
9. China is still a major world charterer and a leading client in the London
chartering market, with chartering costs exceeding $500 million, or approximately
T% of China's import bill in 1974. During early 1975, however, a shortage of
foreign ex,;hange curtailed some of this ac~i~~i'ly, T?te fleet's recent growth an.f
the change in its composition is allowing Chinese ships to carry cargoes, particularly
petroleum and bulk products, previously carried on chartered ships.
The international fleet operated a tnnkcr, Hong Hu, between 1966 and 197?. '1'he Ta?Ch7ng 29, ::
domestic-fleet tnnkcr, sailed to North Korea under intetnationm fleet rcoistry in 1972 and early 1973.
2
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('binn: hrl.?nurllnnnl I~MeI Arqul+lllon., by Country of ('on~InrrNnn
_ . _
. _ _
_.._.-__.
_ __
Ihnuauul I)rndwrl~hl 7Lnn
1972 74
...._._.
I'l7~
_....
197.1
_
197.
i'olyd
I'alnl
Nrw
I)~cd
'total
Ncw
Uu?d
'1'olul
Ncw
Ur,rd
Inlnl
2,IH2,9
275.(.
1(1'/
2
I6SA
536
2
1
rV
d'
,
,
9.3
;106,7
1,.451.1
.112.9
I,OIH.2
uu
onununlvl
I,H49.4
2117,H
41.4
IG6.4
493.0
'/H.1
,19G.7
1,146.6
12H 4
OIH
I
2
tiwcdcn
57H H
1117.1
1117.1
4'11 '1
,
.
7
471
Wesrl~cunnnY
1?I,'J
SH.9
SH.y
12.11
1?,11
!iI,U
10
4
.
'llp
h
Yul~u~luvr,r
165.1
? 7.0
2'1.11
,..
6'J,?
6'!.?
n'J I
.
0'J I
.
.
Nclhcrl,urds
14~S,N
.41,.1
{~?1
H7.'J
Hl.7
~ , H
25
H
Ilnikd klnl,dum
I1~1,11
?0.1)
26.11
'11.11
71.11
17.(1
~
.
1)
Il
IIrIJ~hnn
I I H.?
....
I I H, 2
,...
,
I I H 2
I~inlniul
I(17.o
64.6
14.4
50.2
29.11
14.6
14,1
1
14
I~1
1
Nu1w~~V
I
HS
.
.
..
11.H
.11.H
5,1.5
5
1
5
lal,an
H 1.4
?'/ 7
14.5
I5 ?
5i
'1
14
h
.
,
1'>
I
Denmark
50.4
.
.
.
'.
50.4
50.1
Ilancc
40.'1
25.0
....
2.?.11
,` I .'J
.
')
~ I
lay
I?.5
_.
..
12..';
!J.ti
_
.
onunmdsl
'
a;(.1.5
67.H
G7.H
....
61.2
61.2
....
...
2i4i.5
.
21)x.5
(
mw
X10.11
51,2
51,'2
~:?.l,
42.0
._
140.2
140J
....
I ;icl Ucnnany
'
OH.H
11.9
I1,'J
Sd.'J
54
'!
_..
?Icnul
14.0
I4.h
14.0
.
trunanl,r
14.1
_
, ?r
....
....
-
f%lc~ct 1'rofilc
10. The composition of the international f7ect shifted dramatically in 1974.
At the end of 1973, general-purpose dry cargo ships accounted for 85`o of the
fleet. During 1974, purchases of tankers and bulk carriers totaled nearly 900,000
DWT, reducing the share of dry cargo freighters to GO`%, by' thr end of the year.
Pur(;1lascs in 1974 included 16 bulk carriers with a to?al capacity of SOC,000 DWT
an(I 7 tankers with a capacity of over 400,000 DWT. With the addition of four
more tankers in early 1975, the international t7ect's petroleum-currying capacity
exceeds 600,000 DWT. This will allow the I'ItC to carry as much as one-third
of 1975~s estimated petroleum capons a. 8 million tons to Japan. Chinese
purchases, by ship type, arc reflected in Table 2, and t7eet composition at the
end of 1973 and 1974 is shown in Table 3. (For a listing of international fleet
ships, sec Appendix A.)
11. As tilt international fleet has expanded, it has improved in size and age.
Witil the addition of the larger bulk c,:rncrs ar-d tankers, average size reached 16,000
DWT zt the end of 1974, about the world average and a 40% Increase since 1971.
Average age decreased to about clght years. This trend should continue as larger,
more modern vessels are purchased.
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('hiuctir Inlcrrurtitin;rl hlccl Acrluitiitions, by Shilr'fypc
.
I !)72
1973
1974
"I'ypc of Ship
Nurnlxr
of !ilrips
'I'housau'I
Ileadwcight
'1'a-ur
Number
of Ships
'fhousarrtl
1)eutlweiKhl
Tons
Number
of Ships
7'huus;md
1)endwcight
Tans
'1't-Ial
2
275.6
37
SS6.2
61
1,35.1
Ury c:ng~r
.~?
.''1`~.r,
~7
.~42.?.
37
43G
(i
Bulk c;uricr
'
'
...,
....
`-
:?I I.0
I(~
,
SOO
S
I
ankcr
..,.
...
....
....
7
.
402
2
I'asscngcr/c;ngu
....
....
I
3.0
I
.
11.8
Chinese Inlcrnutional I~Icrt Composition, by SiuP ~1~YIx
~_
Nun~bcr
trr strips ^
Thousand Pcrccnt
_ ncadwei he Tuns __ or rlItermodal Shipping Technology
20. China is cautiously approaching new shipping technologies.
Containerization, LAST-I (lighter-aboard-ship), and Ro/Ro (roll-on/roll-off)
intermodal systems arc capital?intensive technologies requiring large initial
investments in specialized ships, equipment, and port facilities. China's abundance
of unskilled labor is a ready substitute for these systems at a substantially lower
Secret
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cost. The efl~iciencier of these new Icchnolot;ies, however, arc hccominl; more
attractive as I'It(' I?oreil;n truck expands. Ar ;~ result, the ('I~iinesc have cntcrecl
tltc initial stage ul' conlaincrir.ution and arc actively exploring alternative intcrnxrdal
syslcntr.
21. Clrinesc atnlaincriralion began with fhc crtahlirhr~~cnl of a joint
Sinn-Japaucrc container scrvicc in September 19'13, Under a preliminary al;rcement,
a .rial scrvicc was opened, with orte sailinr, a month by a Japancsc and one by
a Chincsc ship. In November 1973 the YcnehenK, a conventional city cargo vessel
carrying 30 amlainers to Kohc, hecanre the first Chinese ship to deliver containers
abroad. Following the initial success of tltc trial scrvicc, two ,-apancse shipping
companies agreed to expand their ser~?~~?~ to eight railings a month during the last
half of 19'/4. Verselr in this trade call at Yokohama, Osaka, and Kohc in Japan
artd at 'Tientsin and Shanghai in (:'hina.
?2. In the rununcr of 1974, the Chincsc began a limited container scrvicc
to the United States and Western Europe from Hong Kong. Working with Danish
Ma~~rsk Lines, cargoes arc amtainerired in China and shipped by r;~il to I Ivng Kong,
where they arc loaded ors Macnk Lines containcrshiltr. This scrvicc is scheduled
to expand in 1975 when Chincsc coastal vessels arc to load containers at Chinese
ports and deliver thorn to }Iang Kang fur transshipment.
~3. The Chincsc arc cgttipping port facilities at Shanghai, Canton, and
Tientsin for handling sr,~all numbers of containers. The inst;dlations nt Canton and
Tientsin -two of C!t~na's major ports -will use spcciaiize~l container-handling
equipment, some of i manufactured in Japan and the United Scats s. [3y the end
of 1978, two cont~tin~~rship berth:; ~tiill be available at each of thy. three port,.
The Role of the Chincsc International Fleet
24. Ships of China's international fleet were used most heavily in the Japancsc
trade, followed closely by calls to Western Eurepe. In Western Europe, the Chinese
fleet cr;;!ed most often at ports in the N-aherlands, West (;ermany, and Italy --
iml.~~tant sources of machinery, equipment, and fertilizers for the Chincsc
economy. Chincsc ships continued to call at East European ports, particularly
i., Albania and East Germany, but none has called at a Soviet port :,mce 1966.
25. Bulk carrier and tanker acquisitions totaling more than one million DWT
have allowed the intentationai fleet to carry bulk commodities and petroleum in
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C'hina's Iradc for the first tints. ('OS('O's hulk carriers have p;u?licipaled in the
grain h?aclc wills ('a~tada, nuslralia, nrgcnlin;t, and .lah:;~t. So far, the rapidly growing
tanker fleet has principally r;uriccl ('Itincsc petroleum exports to .lap;ln. 'I'bis itadc
is expected to IIICI'easc sh,u?ply in the next I?cw year;;, ol'fcrinE; aclclccl cluliloyntcul
I'cr.~ ('hitrl's tankers.
2h. 'I'hc intcr~tatiunal fleet will continur to expand, increasing C'hina's .;hare
of tltc ntoventcnt of its growing; foreign lraclc. I~Iccl tonnage should approach 4
trillion I)W'I' by the cncl of the I~ourlh I~ive-Year I'lun. Uuntestic shipyards arc.
e.xpcctetl to dclivct? aver ::00,000 UW'I', and foreign purchases will adct up to
I million UW'I'.
2"l. 'I'hc composition of the fleet will continue to shift toward hulk carriers
and Lutkcrs. nllhough acduisilions of general carE;o ships wi!I continue, more
cntphasis will he placocl colt additional hulk carriers for imports of grain, fertiliser,
and other hulk contntodities. The. growth of the tanker fleet, however, will
outshadow all other fleet acquisitions. "1'he fleet acquired over 200,000 UW'1' of
new tanker tonnage during the first four months of 1975, about HO'i'~ of the. total
tonnage aclclccl during this period. China is negotiating for additional tonnage in
the 10,00075,000-UW'1' range and is actively socking larger (100,000-DW'I') tankers.
'I'rn growing irtpurtancc of I;etrolcum exports in China's foreign track and
balance-of-payments position assures additional tanker pt.trchases through Peking's
next live-year plan, beginnint.~ in 197h.
2R. Somalia's cancellation of i-s ~7oi; of convenience in early 1975 may hasten
the transfer of the Chinese-controlled Hong Kong fleet -currently regisfercd antler
the Somali flag - to China's international feet. A sudden absorption of an
~:;~ditional 1.4 t~tillion DWT, ltowcvcr, would worsen the international fleet's severe
sl.ortagr. of skilled officers and crews. 11s a result, the Chinese may allow Hong
Kong Chinese or foreigners to sail under the PRC flag or trar. ?fcr the 1-long Kong
fleet to other flags of convenicncc.
29. During early 1975, as China encountered foreign exchange shortages,
some chartering activity was curtailed and new shipping contracts were being settled
in Hong Kong dollars to employ Peking's substantial Hong Kong foreign exchange
resources. The foreign exchange problem, however, did not seriously impede fleet
expansion, as purchases during the first four months of 1975 approached $(,0
million.
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Secret
PRC: SHIPS CiF THE INTERNATIONAL MERCHANT FLEET
AS OF 31 DECEMBER 1874
Ship
Dcndwcight
Tons
Country
Yenr
Ycnr
Acquired
'I'utrl (178 ships)
2,873,853
"I'icntsin Branch (;17 drips)
627,252
Baci Shan
10,442
West Germany
1959
1974
BoaUrtl;
13,851
Finland
1966
1972
C'hangting
14,605
Finland
1971
1972
Da Fcnl;
13,000
Chins-
1974
1974
D;t 1-.i
13,000
China
1971
1972
Da Xing
13,000
China
1974
1974
1)a 1'c
13,000
China
1972
1972
Uachcrtg
14,522
Japan
1973
l ~i73
Uaminl;
12,35(1
West Germany
1958
1970
Dalian
14,522
Japan
1974
1974
Uatung
12,352
Wcst Germany
1959
1970
Dunhuang
15,340
United Kingdom
1967
1967
Eiaifeng
12,530
East Germany
1969
1969
I'lainen
i 2,430
East Germany
1968
1968
Flongmcrt
t 3,870
East Germany
1974
1974
rluatinh
14,434
Finland
1972
1973
Jinn flu
50,390
Denmark
1964
1974
Jiangrnen
12,295
East Germany
1966
1966
Jiangting
14,SUcJ
Finland
1972
1972
Jin 1iu
45,725
Sweden
1963
1974
Jinsha
15,340
United Kingdom
1967
1967
Jiujiang
15,663
Fence
1966
1966 -
Lcting
13,893
Finl,+nd
1966
1972
Lqn~, Men
13,600
East Germany
1974
1974
Qimcn
13,870
East Germany
1973
1973
Tian Mcn
13,600
East C,crmany
174
1974
Xing 1-lai
30,525
Wcc' Gcrrnany
1961
1974
Xiu Shan
N.A.
N.H.
N.A.
1974
Yanting
14,555
Finland
1973
1973
Yin Hu
58,555
Sweden
1965
1974
Yong Men
13,870
Easi Germany
1974
1974
Yu Hua
11,765
Netherlands
1958
1974
Yu Men
12,295
East Germany
1965
19!5
Yu Ting
14,200
Finland
1974
1974
Yun Hai
33,700
Sweden
1963
1974
Yushan
N.A.
N.A.
N.A.
1974
Zhenjiang
15,663
France
1966
1966
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Ship
Ucadwcixftt
'Tons
5hanl,hai liranch (Sx ships) 799,7.SS
i'ountry
Ycur
Arquirr;I
Anfinl;
14,32.6
Finland
I'Ji0
1')71
l3ci An
.},(,95
Rnntani:t
1'/74
I'~74
13ei Ilal
23,000
West (iennany
196.3
I')"14
13in 1L?!i
33,001
tiwcdcn
1963
I'?73
Ch:utt.; An
1,500
Rouuuri~t
19b7
1')c,7
Chao Yan};
I :3,4xx
Chh:a
1967
1')67
Chonl~ Min};
14,000
Netherlands
1961
1')74
Ding I~lai
16,205
Swcdcr-
19h.3
1')73
Dung An
4,695
Romania
1')74
I'-74
Dong Ilai?
2x,360
llnit?~d Kingdom
1965
1973
Dunl;fctrl;
13,4xx
China
1966
1')66
I~cnl; I)ao
14,x00
(:'hin:t
1974
1')74
l~cng Gc
14,n00
China
1974
1974
I~cn}; Lang
14,H00
('hina
1974
1971
I~cn}; Min);
14.x00
('hin:t
1973
1')73
Fcng Qin~;
14.x00
China
1974
1')74
I~cng Xiang
14,x00
China
1')74
1')74
Fcrtg YanG
14,x00
China
1973
1973
I~cnL Yi
14,800
China
1974
1')74
Fcnl~ Yinl;
14.x00
China
1974
1')74
I~cngchcng
7,153
Pula-ui
1971
1971
Fcnbguan^
14,x00
Chine
1971
1971
Fcnl;lci
14,163
China
1')70
i 970
Han ('boat!
14,000
Yugoslavia
1973
1')73
Flar. Yin
15,184
Wcst Germany
1970
1973
Flargshrti
10,801
Netherlands
1961
1972
liong Qi
15,952
China
1965
19(,5
Flau Yin
15,202
West Germany
19(,9
I7.1
1973
(
on1; Ihul
13,(H)5
5wcdcn
962
1'-73
Ihrlrt
12,514
Wrst (~crtnany
I')S8
Ig72
Dade
12,(,23
Wcst Germany
1962
I'-7)
Uanh:ll
24,800
llnitcd Kingdom
1063
1974
1)a?~ing
12,625
Wcst GcrnrlnY
19(,2
1')71
I)apu
12,548
Wcst Germany
195'r
19'11
Dcdu
10,2119
Swcdcrt
1962
1')73
Dung Mint;
15,424
Ncthcrl:utds
1964
1')73
Uongshart
I I ,1 till
Wcst Germany
19G I
1't72
Uunhu:l
12,430
Swc(Icn
1961
1970
Fuh:li
18,490
Ncthcrl:uuls
1963
1')73
Gao ! lu
74.480
Swalcn
1966
1'-74
(;uangllc
16,780
Wcst Gcrrnarty
1972
1')73
Guangrtting
14,987
Ncthcrlanc's
1965
~
1 )65
Guangsltlli
9,583
Ncthcrl:ut(1s
1')59
1')73
Guhal
47,750
Swcclcn
1968 ~
1')74
Ilaining
11,650
Poland
19!9
196')
HanNhou
10,020
Fast Germany
1958
1961
Hong liu
5,525
Swcclcn
1965
1974
Huang Ilai
22,140
West Germany
1961
1974
Hulin
13,500
Yugoslavia
1974
1974
Jiang Du
8,198
Finland
1962
1')71
Jianhua
5,400
France
1951
19(17
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