SHANGHAI: Construction started on Friday on what will become the world's largest shipyard, marking a major step forward in China's ambition to become the world's leading ship builder.

In the first phase of the US$3.6 billion project, the Jiangnan Shipyard Corp, a subsidiary of China State Shipbuilding Corp (CSSC), is relocating to Changxing Island to make way for Shanghai Expo 2010.

The Jiangnan Shipyard will expand its shipbuilding capacity from the current 800,000 deadweight tons (DWT) a year to 4.5 million by 2010.

The yard's first ship is expected to be delivered by 2009.

In the second phase of development, CSSC's subsidiaries, such as Hudong and Waigaoqiao, will add more yards along Changxing island's 8-kilometre coastline.

By 2015, CSCC is expected to have an annual capacity of 8 million DWTs, half of China's current production capacity.

By then, Changxing is expected to have become the world's largest shipyard.

Shanghai will also become the world's largest shipbuilding base, tripling its capacity to 12 million DWTs by 2015.

"The central government has called on China to become the largest shipbuilder in the world. The Changxing base is the most important step forward in this plan," said CSSC General Manager Chen Xiaojin on Friday.

The shipbuilding industry is valuable to the Chinese Government as it promotes domestic manufacturing and machinery industries, creates job opportunities and revenue, and improves the country's naval capability.

The country's shipbuilding industry has achieved an annual average growth of 17 per cent over the past few years and China now accounts for a quarter of the world's shipbuilding market, up from less than 5 per cent five years ago.

Japan and South Korea each account for one third of the global shipbuilding market.

"With the construction of Changxing we are breathing down the necks of Japan and South Korea," Xu Lunfang, senior engineer at CSSC's Chengxi Shipyard, said. "The market competition is set to intensify."

Chen said the Changxing yard offers CSSC an unprecedented opportunity to develop its business as the global shipbuilding market is still expanding.

The yard will also increase Chinese production of high-tech and high-value-added ships, including liquefied natural gas carriers and super oil tankers.

Friday also witnessed the 140th anniversary of the Jiangnan Shipyard.

The yard was founded during the late Qing Dynasty, and was the first manufacturing base to produce steel, naval ships and steel cannon.

(China Daily 06/04/2005 page5)