Amidst the bleak shipping industry landscape, Chinese ship leasing companies invested \$11.5 billion in the leasing industry in 2016, taking over ownership of hundreds of vessels and becoming the new "gold masters" of the global shipping industry. This latest sign indicates that the shipping industry is undergoing a rapid reshuffle during a protracted financial crisis, and it also allows China's influence in the global shipping industry to continue to expand.
According to the Financial Times, after the 2008 global financial crisis, the three major markets of the shipping industry—dry bulk carriers, container ships, and tankers—all fell into a slump. European banks and US private equity funds suffered heavy losses and were unable to provide assistance. Chinese financial leasing companies seized the opportunity at this time, stepping into the gap left by the near-complete withdrawal of European and American banks from ship leasing. These transactions, reached by ship leasing companies under the Industrial and Commercial Bank of China, China Minsheng Bank, and Bank of Communications, provided much-needed financing for shipowners.
At the London Shipping Conference in January this year, it was reported that Chinese ship leasing companies invested \$11.5 billion in the shipping industry in 2016. This figure is considered to represent hundreds of ships. The world's three largest container ship operators, Maersk, Mediterranean Shipping Company, and CMA CGM, have all participated in Chinese ship leasing transactions.
Wang Yougui, executive president of Canadian container ship owner Seaspan, said that while previous lenders "almost closed their doors," Chinese banks offered very attractive financing terms and embraced the shipping industry. Industry insiders revealed that at the beginning, China only intervened in cases related to the domestic shipbuilding industry, but in the past two years, it has also lent to operators with no obvious connection to China.
Due to the huge demand for imported bulk commodities, the export of container cargo, and the large-scale shipbuilding industry, China already enjoys a certain influence in the global shipping industry. Now that Chinese financial leasing companies are providing large amounts of loans when the industry is unable to obtain loans, its future influence may be even greater.
However, the current trend has also raised concerns in the industry. China uses a sale-and-leaseback operating method, that is, the shipowner first sells the cargo ship to China and then leases the ship at a general market price. If the market downturn forces operators to default on payments in the future, whether these agreements will give China additional power over world shipping. Industry insiders say it is unclear how Chinese companies will act in the face of future crises.
