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Despite Vow to Limit Support, China Continues Subsidizing Domestic Shipbuilding Industry

China is handing out new subsidies for buying ships to help its beleaguered shipbuilders, confounding a government pledge to reduce support for sectors with over-capacity in order to reform the economy.

The central government will set aside "special funds" that give shippers subsidies of 1,500 yuan per gross ton – a unit of measure for the volume of vessels – to replace old models with new and greener ones, a government statement said.

The scheme will run until the end of 2015. The subsidies are only valid for ships scrapped one to 10 years ahead of mandatory retirement dates, the statement said.

The state subsidies are the latest given to Chinese shipbuilders, which are fighting falling demand and excess capacity. It suggests the government is loath to see a big industry that is also a big employer wither.

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