Chinese Law | China: Vol.2, No.07

CHINA MARITIME LAW NEWSLETTER

Vol. 2, No.7 - August 15, 2002

TOPICS THIS ISSUE:

Chinese yard unit hit with US arms sanction
Agricultural Bank of China to form consortium to fund Shanghai port project
China Shipping into the Heavy-lift Market
China's first train ferry in action
Mainland oil giants propose third and fourth LNG terminal
Vietnam busts sea smuggling operation from China

Chinese yard unit hit with US arms sanction

The US has imposed sanctions against a trading branch of China's state shipyard empire accusing it of arms sales. One of eight companies named in the case, China Shipbuilding Trading Corp (CSTC) is the new building broker for China State Shipbuilding Corp, the umbrella group for centrally owned shipyards in the Shanghai area and southern China. In the first use of the "Iran-Iraq Arms Non-Proliferation Act of 1992," CSTC will be blocked from conducting any business with the US government or earning any import-export clearance for two years.

It is not clear whether the sanction will affect any project underway in Chinese yards for American customers. The official document released by the US State Department did not provide any details on the goods or transactions, but a press report from the US said the incident involved a transaction with Iran.

The other seven companies and one individual were also sanctioned under the "Biological Weapons Control and Warfare Elimination Act of 1994." The sanctions were imposed "for knowingly and materially contributing, through the transfer of goods or technology, to the efforts of Iran or Iraq to acquire chemical weapons or destabilizing numbers and types of advanced conventional weapons." The other named Chinese companies were a range of machinery and electrical trading companies.

(Source: maritimeasia.net)

Agricultural Bank of China to form consortium to fund Shanghai port project

The Shanghai branch of the Agricultural Bank of China (ABC) has pledged to join in the construction of a new port project in Shanghai, by forming an international bank consortium and issuing bonds.

The bank has agreed to provide 1bn RMB (122m US$) to build urban infrastructure for the port project. Furthermore, the new port project, known as the Yangshan Deepwater Port, is part of the Shanghai International Shipping Center. It also includes Donghai (East Sea) Bridge, the New Port Town, the Shanghai-Luchao Port Expressway, and land facilities for the Luchao Port.

The bank has also joined with two domestic bank consortia to grant more than 10bn RMB (1.2bn US$) in loans to the port project.

(Source: AFX-ASIA)

China Shipping into the Heavy-lift Market

China Shipping Group and the Rotterdam-based Jumbo Shipping SA formed a tactical association to take advantage of the Chinese heavy-lift market. A joint venture, China Shipping-Jumbo Heavy-lift Co., Ltd. was officially launched in Shanghai on April 18, in conjunction with China Shipping Logistics Co., Ltd. China Shipping Group takes a 60% stake in the new venture. The association is expected to strengthen China Shipping Group's competitiveness in bidding for large-scale projects that consist of both heavy-lift project cargo and containers.

Jumbo Shipping operates 11 specialized heavy-lift ships around the world, with the maximum single-ship lifting capacity of 1,000t. A new vessel offering 1,600t lifting capacity is to be put into operation in the near future. Michael Kahn, managing director of Jumbo Shipping, and Mr. Li Kelin, president of China Shipping Group, unveiled the company plaque at the ceremony.

(Source: Dowjones.com)

China's first train ferry in action

The first Chinese-made train ferry hit the water in Shanghai's Jiangnan Shipyard last weekend. The Yuehai Passage will link Hainan and Guangdong provinces. The 12.5-nautical-mile Qiongzhou Straits has been a bottleneck blocking the development of the island province. The ferry will be a big incentive to the further development of Hainan and the exploration of resources in the South China Sea. The ferry is 165.4m weighing 13,400 tons and has a carrying capacity of 4,080 tons. The ship can carry 40 containers or 18 passenger compartments each measuring 26.5 m long, together with 50 cars.

The ferry is due to arrive in Haikou on October 31. The shipyard is expected to deliver the second ship in May next year. Visitors and cargo to Hainan currently have to either fly to Sanya Airport or go to Zhanjiang in Guangdong Province and then transfer to small boats. Work started in 1997, with investment of $542m. A 138 km-long railway is under construction to connect Zhanjiang, with Hainan. The ferry standard is of a three-star hotel and passengers can receive 10 television channels.

(Source: maritimeasia.net)

Mainland oil giants propose third and fourth LNG terminal

Top state oil giants PetroChina and Sinopec have voiced their intention to back a possible third or fourth Chinese import terminal, company officials said on Friday. They will challenge China National Offshore Oil Corp (CNOOC), the third largest oil and gas firm and state-designated leader of the LNG business for the mainland market. "It's unlikely that one company dominates China's LNG business in the future. We are going to see competition and cooperation among Chinese firms," said a CNOOC strategic planning official. China, which started its LNG industry about five years ago, is expected to begin operating its first 3m tonne per year terminal in Shekou in 2006. That deadline was pushed back from an optimistic 2005. A number of foreign carriers had hoped to participate in the vessels for the Shekou project, but the high costs of building an LNG carrier independently in China means that the extra costs of such ships would be more easily folded into a broader supply contract. Beijing is evaluating a second LNG plant planned for operation around 2008 in southeast coastal province Fujian. Both projects are led by CNOOC.

(Source: maritimeasia.net)

Vietnam busts sea smuggling operation from China

Vietnam's coast guard said it has seized 21 fishing boats used to sneak contraband into the country from China, in its largest ever maritime smuggling bust. The vessels, all crewed by Vietnamese from the central province of Nghe An, were caught on Saturday following a 100-day surveillance operation in the South China Sea. The captured goods, which included fans, bicycles and televisions, were made in Hong Kong and mainland China and then transported by Chinese vessels to international waters where they were transferred onto Vietnamese boats.

(Source: AFXnews.com)

The China MARITIME Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.