Chinese Law | China: Vol.2, No.05

CHINA MARITIME LAW NEWSLETTER

Vol. 2, No.5 - June 28, 2002

TOPICS THIS ISSUE:

Financing in Place for Shanghai's Super Port Plans
China Mulls Maritime Legal Upgrade
Twenty-nine Carriers Permitted to Offer Non-Vessel-Operating Services
Insurance a Must for Maritime Safety
Tightening of Rules at Shanghai Harbor
Hebei Province Keen to Develop Marine Industry
Bohai Bay To Become China's Main Maritime Oil Producing Zone
Meredith Confirms Qingdao Interest
Hangzhou Bay site for terminal

Financing in Place for Shanghai's Super Port Plans

A consortium of 10 domestic banks signed a deal yesterday to provide a 17 billion Yuan (US$2.048 billion) credit line for construction of the Yangshan Deep-Water Port, a major part of Shanghai's grand scheme to position itself as a global shipping center. "Now that the capital has been raised and procedural and technical issues are solved, the project is ready to kick off," Vice Mayor Han Zheng announced at a signing ceremony for the financial deal. Construction is now expected to start before the end of July.

The project calls for the construction of 33 deep-water berths on Xiao-yangshan Island in Hangzhou Bay, which sits 27.5 kilometers from the city's southern coast, by 2020. No final budget has been announced for the full project, but the first phase to be completed by 2005 will cost 14.31 billion yuan (1.7 billion USD).

Yesterday's deal will see a consortium of five domestic banks - China Construction Bank, the State Development Bank, the Bank of China, the Industrial and Commercial Bank of China, and the Shanghai Pudong Development Bank offer developers of the project 7.5 billion yuan (906 million USD) in loans for first phase construction.

The first phase of the project includes a 31.12-kilometer-long bridge connecting Nanhui District's Luchao Harbor with the island, an 80-square-kilometer coastal township, a 1.7-square-kilometer man-made island next to Xiao Yangshan Island and a 1,600-meter-long navigation channel along the island to allow super-large container ships to enter the port. "Yangshan port construction will be the biggest port ever built on the Chinese mainland, "said Shao Rongshun, a senior engineer with the Ministry of Communications.

(Source: Eastday.com)

China Mulls Maritime Legal Upgrade

China is considering establishing a specific maritime court of appeal based in Beijing. Currently anyone wanting to appeal a decision from any of the country's ten maritime courts must go through a local provincial high court. These courts tend not to have any specialist maritime judges. As a result, verdicts are rarely turned over. One problem at the moment is that the courts of appeal, without any specific maritime knowledge, tend to defer and go with the original finding from the maritime court, a legal source based in Shanghai told MAT. With shipping in China taking off and the subsequent greater international scrutiny of Beijing's maritime legal procedures, the government urgently wants to be seen setting the standard, creating legal transparency in order to allay any foreign fears over the country's court practice.

(Source: www.maritimeasia.net)

Twenty-nine Carriers Permitted to Offer Non-Vessel-Operating Services

China's Ministry of Communications issued certificates in May 2002, Chinese companies, allowing them to offer non-vessel-operating services. The China Ocean Shipping Agency was one of the companies that received approval. Non-vessel-operating services are important to the development of international maritime transportation services, especially the international maritime container-freight business, according to Xinhua News Agency.

The management system of non-vessel-operating services was established in China for the first time after the regulations on international maritime transportation issued by the state council became effective on January 1, 2002. According to the regulations, non-vessel-operating services refer to the processing of shipping orders, booking space on ships and collecting shipping fees. In order to conduct such business, service providers must register at the local communications office, which operates under the auspices of the state council. This new management system is being adopted by Chinese authorities with regard to international maritime transportation to prevent fraud and to protect the rights of shippers.

At present, Chinese vessels engaged in international maritime transportation can carry 37 million tons of cargos, making the Chinese fleet the fifth largest in the world, in terms of cargo capacity. More than 20 overseas transportation companies have opened branches in China. Over 60 foreign international maritime container line operators have opened branches at Chinese ports and currently have a 65 percent share of the market.

(Source: www.chinaonline.com)

Insurance a Must for Maritime Safety

China's shipping industry should adopt a compulsory liability insurance system to alleviate environmental damage and property and human loss in the face of an increasing number of marine accidents, said an official with the State Maritime Safety Administration.

Speaking at the first China International Shipping Technology and Equipment Exhibition held at the northern port city of Tianjin last week, deputy director of the administration Liu Dehong said a law should be drafted to force ship owners, especially smaller shipping companies, to buy third party liability insurance. In this way, even if the ship owner cannot afford to compensate for losses caused by an accident, the victim, the third party, can still get reimbursement from an insurance company. Moreover, passengers should be required to buy life insurance when boarding a boat or ship, said Liu. This kind of compulsory insurance system could help avoid financial trouble and embarrassment following marine accidents that claim large numbers of lives or oil spill accidents that pollute the environment, he said.

In December 24, 1999, the passenger ship Dashun capsized and sank in the Bohai Bay off Yantai, killing 282 people on board. The company that owned the ship could not afford compensation for the losses. In order to prevent social unrest, the local government was forced to reimburse the families of the deceased. In 1995, two ships collided in Zhanjiang, a port city in the southern province of Guangdong. One of the ships spilled 35 tons of crude oil into the sea. The local People's Court auctioned off the ship that caused the spill. But the money received was still not enough to cover the cost of the clean up, which totaled 360,000 Yuan (US$43,500).

The fifth largest fleet in the world is cruising in the country's 18,000 kilometers of coastal line and 110,000 kilometers of rivers. As the traffic increases on China's waterways, the number of accidents has also increased. Statistics indicate that in the last 10 years, 14,900 marine accidents have occurred in China, in which 3,107 vessels and 6,084 lives were lost, a loss totaling 1.9 billion Yuan (US$230 million).

(Source: China Daily)

Tightening of Rules at Shanghai Harbor

Shanghai Maritime Bureau has decreed that all tankers and other vessels considered likely to cause pollution arriving at Shanghai Harbor must have an apron deployed to protect the environment from oil pollution. The practice is already followed in some parts of the port, such as the Shanghai Refinery wharf and at shipyards. The Bureau will shortly publish regulations listing the types of ships to which the rules will apply, together with prices.

(Source: www.shipbuilding.com.cn)

Hebei Province Keen to Develop Marine Industry

North China's Hebei Province is determined to benefit from its thriving marine industry. The province, with 487 kilometers of coastline, has invested more than one million Yuan to set up breeding zones of fish, crabs and shellfish, in addition to research into high-tech industry based on marine organisms, according to officials at the provincial bureau of oceanography. In the past centuries, the Chinese nation has always paid greater attention to its land resources than its marine ones. Now, it is clearly high time for China to pay more attention to its vast ocean treasures.

Experts believe that, as a major developing country with a long coastline, China must exploit the ocean as a long-term development strategy while protecting marine resources. China has a mainland coastline of 18,000 km. In addition, there are more than 5,000 islands in China's territorial waters, each with an area of more than 500 square meters, and the islands' coastlines total more than 14,000 km. China also exercises sovereignty and jurisdiction over vast continental shelves and exclusive economic zones.

China has adopted a policy of developing and utilizing this wealth of marine resources in a comprehensive way. In recent years, China has made constant efforts to upgrade its maritime fishing, transportation, salt making and other traditional sectors, and to develop aquaculture, offshore oil and gas, marine tourism, marine pharmaceuticals and other new industries.

(Source: Asia Info Daily China News)

Bohai Bay To Become China's Main Maritime Oil Producing Zone

There are seven one-hundred-million-ton oil fields that have been discovered in Bohai Sea Bay. By the year 2005, Bohai Sea Bay will become a main producing zone of China's maritime oil. Among these seven one-hundred-million-ton oil fields, the Penglai 19-3 oil field in the middle of Bohai Sea is the country's largest maritime oil field so far. It is the country's second largest developed oil field, with explored reserves of 600 million tons, only second to Daqing Oil Field.

It is said, by the year 2005, annual production of China's maritime oil will climb to 40 million tons. Bohai Sea Bay's oil annual production will jump up to 20 million tons from the current 3.58 million tons, becoming China's largest producing zone of maritime oil. There are currently several joint venture projects developing Bohai Sea Bay's oil.

(Source: Asia Info daily China News)

Meredith Confirms Qingdao Interest

John Meredith, group managing director of the giant Hutchison Port Holdings empire, has confirmed that he is interested in port development in Qingdao, northern China, first reported in Maritime Asia Today, early last month. Mr Meredith told Hong Kong's South China Morning Post newspaper, "The only place we are looking at is Qingdao." The capture of Qingdao would cement HPH's Chinese hegemony, noticeably lacking a northern presence at the moment, without a port north of Shanghai.

Booming Qingdao would make a smart investment for HPH. The port posted a 2001 25% year-on-year growth to 2.64m TEU, galloping into the ranks of the world's top 20 ports. 2002 is also looking strong with a 26.4% growth for the first four months. Li Ka-shing, the tycoon behind HPH, met with Qingdao's provincial governor last month fuelling speculation that HPH was lining up a bid. P&O Ports, who are currently the only foreign terminal operator in the city, continue to claim that they have first right of refusal to any further container terminal development. P&O Ports and HPH last dueled at the beginning of the year over the $215m sale of cash-strapped Hyundai Merchant Marine's sale of its Korean terminals. HPH won the deal at the eleventh hour, much to the consternation of P&O Ports.

(Source: www.maritimeasia.net)

Hangzhou Bay site for terminal

CIG Zhapu International Terminal II is to be built around 100 km from Shanghai in Hangzhou Bay. The project is aimed at boosting competitive options for companies in the area by providing a better transport service. The terminal, which will cost US$61 million, will partially rely on loans from the World Bank, which will put up $14 million. The port is located near industrial centers in the Yangtze river delta and will be able to handle 600,000 tons of cargo a year.

(Source: www.tdctrade.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.