Early developments

In 1964, the Sixth Ministry of Machine Building was created^[6] to oversee China's shipbuilding enterprises, which were predominantly engaged in military work.^[7] In July 1982,^[8] as part of defence industry reforms and "defence conversions", the ministry was converted into the China State Shipbuilding Corporation.^[7] CSSC remained under state control but was permitted to operate with "a degree of market-based economic autonomy".^[9] CSSC shifted the industry's focus to commercial work; by 1992, 80% of output was to the civilian sector,^[8] and in 1993 half of the commercial output was for export.^[10]

Spinning off CSIC

In the late 1990s, economic reforms broke up state-owned monopolies and introduced "a limited amount of free-market competition" to improve the efficiency of defence industries.^[11][12] In July 1999, the China Shipbuilding Industry Corporation (CSIC) was spun off from CSSC.^[12] The shipbuilding industry was divided roughly along geographical lines: CSSC retained assets in the east and south,^[13] and CSIC gained control in the northeast and inland.^[14] Both reported to the State-owned Assets Supervision and Administration Commission (SASAC).^[15] CSSC emerged as the smaller entity.^[13][16] Enterprises not affiliated with either conglomerate included shipyards owned by the People's Liberation Army (PLA), provinces, municipalities, foreign joint ventures, and Chinese shipping companies.^[15][17]

Merging with CSIC

Preparations for merging CSIC and CSSC date back to at least 2010, when Hu Wenming became CSSC's party secretary, in anticipation of an industry decline.^[18] Hu was a strong supporter of the merger; he was CSSC chairman from 2012 to 2015, and then CSIC chairman from March 2015 until his retirement in August 2019 because of corruption.^[19] The decision to merge the conglomerates may have influenced not only by a slowing economy,^[20] but also the discovery of widespread corruption in CSIC and Hu's involvement in it.^[19][20][21]

The CSIC and CSSC merger was approved by SASAC in October 2019,^[22][23] and occurred in November 2019; the combined entity took the CSSC name. The reorganization was complete by September 2020. The new entity was the world's largest shipbuilder with 20% global market share and US$110 billion in assets.^[20]

U.S. sanctions

In November 2020, American entities were prohibited by U.S. Presidential Executive Order 13959 from owning shares in companies—including CSSC—linked to the PLA by the United States Department of Defense.^[24][25][26]

Citations

Sources