China To Cap Foreign Investment In Shipbuilding

China wants more foreign investors in its shipbuilding industry but will restrict their ownership to a maximum 49%, the government said. "We want to learn advanced foreign technology and management skills and will adjust overseas involvement in the sector to ensure sustained development," said the Commission for Science, Technology and Industry for National Defense.

But foreign investors seeking to form joint ventures in China will also have to set up their own technology centers and transfer their expertise to local partners, it said in a statement released to state media on Sept. 18.

Beijing routinely caps foreign participation in sectors of the economy it deems to be strategic, such as finance and banking. However, China has recently moved to tighten rules in what appears to be a bid to protect home industry while ensuring it gets the benefits of foreign technology.

China has risen to become the world's third-biggest shipbuilder after South Korea and Japan over the past decade, gaining global market share of 2% last year, compared with 6% in 2000.

Although foreign investment in the sector reached $220 million in 2005, up 45%, domestic technology remains backwards. The government wants local shipyards to produce vessels totaling 17 million tons a year by 2010, up from 12.1 million last year.

Copyright Agence France-Presse, 2006

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