About the aircraft carrier plan of China
- Thread starter bjskyhorse
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You know, I had this same conversation when I worked for COSCO. Everything China has done economically has been... wrong, but then most burgeoning ecomomies haven't had Hong Kong handed to them on a platter.
The HK effect cannot be understated.
For my part, we never ran a ship at a profit. Always at a 12% or more loss and every other COSCO gwilo noted the same thing.
COSCO weren't alone (mind you) but the aggressive trading practices of the SE Asian state owned shipping lines (Malaysia, Taiwan in particular) and our friends in Vladivostok probably forced the recent spate of mergers between P&O/ Nedlloyd and Maersk Sealand and I would hazard a guess Maersk/ P&O Nedlloyd.
Anyway, some people see the Chinese growth as a bubble, but from my perspective it could well be better described as an "elastic surge" (for the economy) but the last throes of the communist party. Meaning I think the sudden injection of wealth that China enjoyed from absorbing HK will also act like a cancer on the communist party ( people like to get rich) yet help reduce the effects of a future recession.
China is not a Tiger, but is some poor communist bastard that has a Tiger by the tail.
my 20 second 2c worth
cheers
w
Not really as the most of the yards are taylored large vessels in the order 100000+ DWT (bigger than CVN21) and absorbing this capacity with military orders would see a military order book of unprecented proportions.
Sounds like the perfect time for PLAN to build it's carrier fleet.
Well the yards could certainly do the steel work but the rest may be a bit to complex for a normal commercial yard. It is also worth noting that these yards are in volved in series production of a number of similar designs which helps with effeicney. A whole new, and more complex, design adds to risk and cost. They tend to be a bit difficult to get to change enything even when it is wrong.Sounds like the perfect time for PLAN to build it's carrier fleet.
I had a mate who was involved in the constuction of a series of handymax bulk carriers and he found it took about three hulls for issues to get fixed in build. any necessary modification took another 3 hulls. He had to keep and excel spreadsheet to track what mods ahd been applied to whihc hull.
It was not minor itesm either but related to the fitting of incorrect fire doors, incorrect installaion of equipemnt and poor placement etc.
There's been a big debate within China for some time about what to do about the dollar problem. It seems the faction which wants to reduce dollar assets is winning. China can't get out of the bind you describe cost-free, but they're trying to get out of it as cheaply as possible, by gradually diversifying their financial assets (but they're still ca 70% dollars), & allowing the RMB to drift upwards gradually. Too sudden a diversification would trigger a dollar crash. Too rapid a revaluation would threaten exporters, though not as much as often thought (think about the imported content of most Chinese exports).
BTW, one small point: revaluing the RMB would only affect the domestic purchasing power of foreign assets. It wouldn't reduce what they could be exchanged for abroad.
As you noted the fixed exchange rate is objected to as it artificially makes China more competitive in the export market. In so far as this effects shipbuilding a rapid float wouel cause problems with labour costs and equipment and machinery produced domestically. I may also have in impact on the cost of domestic steel production if that is not fixed in USD (again labour costs would be the issue combined wiht an increased cost of ore). It si worth noting the cost of ore from Australia was increased recently and China had to accept it as a number of furnaces are currently set up for the Australian grades. The increase was overdue but will have an imapct on Chinese steel costs as well.
For other systesm sourced from overseas it is not such a big issues as the contracts are almost always fixed in USD.
For other systesm sourced from overseas it is not such a big issues as the contracts are almost always fixed in USD.
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I do agree that economically China is caught between a rock and a hard place.
Another thing is that Chinese wages are on the rise, which makes countries like Vietnam interesting.
Subsidies: Government subsidies is just another way of saying that your products are underpriced to remain competitive. The bailout is to be paid by other Chinese. But for China as a whole they are loosing money on that export.
Another thing is that Chinese wages are on the rise, which makes countries like Vietnam interesting.
Subsidies: Government subsidies is just another way of saying that your products are underpriced to remain competitive. The bailout is to be paid by other Chinese. But for China as a whole they are loosing money on that export.
Actually Vietnam has a growing shipbuilding industry. It does not ahve the large vessel capacity of China but is beinging to take business at the smaller end of the market. Not a lot of difference in quality but a pretty big difference in quality.
Subsidising ship building infrastructure of the size in china if it becomes less viable would be a significant and ongoing drain on funding.
contedicavour
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Agree. Regarding Vietnam's shipbuilding capabilities, it is growing even on the military side : there are modified Tarantul missile corvettes building in Vietnam and there could be soon customized Gepard light frigates in Vietnamese shipyards.
cheers
well, we will let the Chinese government worry about that. It's not like they've got to worry about paying for a war.
I was taking a look at the China Shipping Development company's financial statement the other day, looks like their profit level, profit margin, health score and forecasts all look pretty good. I'm still waiting to see one economic forecast that will cast doom and gloom on the Chinese shipbuilding industry.
I was just thinking about this last night when I read China's shipyards are 5 to 20 times less efficient and profitable than South Korean and Japanese yards. Kind of gives you a perspective.
tphuang.
In a second hand book store I once saw the annual report of "Landmandsbanken" 1923 (I believe). That report was optimistic and confident. It had hardly been published - when "Landmandsbanken" went belly up in the most spectacular bankrupcy in Danish history - well except when we were wrestling with England in beginning of the 19th century - then the whole country went bankrupt!
In a second hand book store I once saw the annual report of "Landmandsbanken" 1923 (I believe). That report was optimistic and confident. It had hardly been published - when "Landmandsbanken" went belly up in the most spectacular bankrupcy in Danish history - well except when we were wrestling with England in beginning of the 19th century - then the whole country went bankrupt!
Russia or Ukraine I presume.
It also depends on which ones, the ones in Shanghai are probably the most efficient ones, but they also have the highest wages. But in general, you figure with more experience in the capitalistic practices, these shipyards should become more efficient as the time comes.
Also, this shipbuilding expansion also has allowed for the naval expansion in China. You can just see all of the news ships coming out at an extremely fast pace. Especially Hudong recently with 054A and 071. If you go through a cycle of the pictures in the last 3 months, you would see what I mean.
tphuang,
I think you are right on. I am under the theory current production is less about the final product and more about maintaining production. Any product built today is an upgrade over existing, but I get the impression the ships being produced for the PLAN today are simply technology demonstrators for new technologies, not intended for mass production themselves, rather a way to develop techniques in the industry for larger production runs of some future class.
By following this strategy China is closing the gap. This size of the gap between the PLAN and US Navy is what makes this a long term effort, but because of the vast scope of the strategy to include both large and small ships, the evidence already exists to show consistant improvement even after only a few years. It is a very wise strategy for those patient enough to see it through over the seveal years required for the PLAN to catch up. China is known for its patience, so I think it is more than likely the strategy will be effective and near parity will be reached sometime around or after 2025 unless the US Navy adapts to this strategy, and finds ways to make obsolete the technologies the PLAN is developing, including AIP and super sonic ASCMs.
I think you are right on. I am under the theory current production is less about the final product and more about maintaining production. Any product built today is an upgrade over existing, but I get the impression the ships being produced for the PLAN today are simply technology demonstrators for new technologies, not intended for mass production themselves, rather a way to develop techniques in the industry for larger production runs of some future class.
By following this strategy China is closing the gap. This size of the gap between the PLAN and US Navy is what makes this a long term effort, but because of the vast scope of the strategy to include both large and small ships, the evidence already exists to show consistant improvement even after only a few years. It is a very wise strategy for those patient enough to see it through over the seveal years required for the PLAN to catch up. China is known for its patience, so I think it is more than likely the strategy will be effective and near parity will be reached sometime around or after 2025 unless the US Navy adapts to this strategy, and finds ways to make obsolete the technologies the PLAN is developing, including AIP and super sonic ASCMs.
And these systems reach IOC exactly...when?
If centuries of technological evolution in naval warfare have teached one thing, then that competition is the central theme...better offensive weapons against better defensive ones. So DEW can stop ballistic weapons? Well they cant stop DEW themselves...and so on. Also the speed of ToT, in whatever ways, has rather increased, so the moment the USN is coming up with something new, it really wont be their monopoly for a terribly long time.
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