China is to encourage its domestic shipping industry to compete with foreign LNG players with the launch of a CNY 20bn ($2.9bn) fund, foreign media reports.

The fund is to target investments in large-scale specialized LNG and LPG vessels and also semi-submersibles.

It is being hailed as the first investment fund made available for the maritime industry in China.

It is also one of only 10 funds to have been approved by the National Development & Reform Committee as part of the government's CNY 4trn ($586bn) stimulus plan.

The fund aims to capitalize on the expected increase in the transport of oil and gas by China, both on domestic and international routes.

The CNY 20bn will be made available for domestic players to purchase ships and charter them to domestic carriers.

It is part of a government policy aimed at ensuring that China does not fall behind the rest of the world in terms of its LNG fleet.

Li Kejun, chairman and president of China Classification Society, is encouraging players to become involved in this more specialized area of shipping.

"I'm sure the fund will extend its business to wider fields in the future but for now, it will be easier to persuade investors, given these ships sell well in the market and are more profitable," he said at the launch ceremony, which was held in the northern city of Tianjin.

Li also says that investors would benefit from the competitive price of vessels in the current sale-and-purchase (S&P) market. Zhang Guangqin, head of China Association of the National Shipbuilding Industry, says China's yards would need more than CNY 20bn to help them recover fully from the global downturn.

In the first nine months of 2009, China's shipyards received orders of 16.9 million dwt, a massive 70% drop from 57.2 million dwt in the same period last year, figures from the association revealed.

During the year up until October 2009, orders for 185 ships, or 6.77 million dwt, were cancelled in China.

source: maritime

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