China bans scrapping of foreign ships by end of year

Overview

The Chinese government has vowed to put an end to the scrapping of ships not carrying a Chinese flag.

The Ministry of Ecology and Environment has issued a notice expanding China’s waste import ban by adding 32 types of solid waste, including “ships and other floating objects destined for scrapping”, to the list.

According to the notice, ships registered under a non-Chinese flag will not be permitted to be imported and further recycled at any Chinese recycling shipyard. The notice will enter into force on 31 December 2018.

The new regulation also includes situations when a non-Chinese ship carry cargo destined to China, with the ship itself destined for recycling in the country while anchoring at a Chinese quay. The new regulation will put an end to this practice too.

In theory, buyers can re-flag non-Chinese ships to the Chinese flag first, and then import the ship as a second-hand ship for scrapping. This practice however, will most likely not represent an attractive business model going forward, as it will trigger a 9% Import Customs Duty as well as 17% VAT.

 

Wei Zhuang
in Shanghai, CN

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