In a significant move to enhance the international use of the yuan, Hudong-Zhonghua Shipbuilding has signed a landmark deal with Seaspan Corporation for the construction of six containerships. This contract marks the first shipbuilding agreement to be settled in yuan, reflecting China's ongoing efforts to promote its currency on the global stage [ab8636df]. The vessels, each with a capacity of 13,600 TEUs, are scheduled for delivery between 2026 and 2028, further solidifying China's position in the maritime industry [ab8636df].
This development comes at a time when China's shipbuilding sector is experiencing robust growth. From January to September 2024, China completed 36.34 million deadweight tonnage (DWT) in shipbuilding, representing an 18.2% increase compared to the previous year. Notably, China accounted for 55.1% of global ship completions, 74.7% of new orders, and 61.4% of total accumulated orders during this period [ab8636df].
The yuan's share in global payments currently stands at 4.69%, significantly lower than the US dollar's 49.07%. However, the recent shipbuilding contract is expected to contribute to the yuan's internationalization efforts, aligning with broader economic strategies [ab8636df]. Meanwhile, the global shipping industry continues to face challenges, including declining freight rates and overcapacity, as highlighted by Cai Huixing, president of the Shanghai Shipowners’ Association. He predicts that shipping rates will weaken further due to reduced demand and an influx of new vessels in 2024 [06fd03c5].
As the shipping landscape evolves, the interplay between China's economic policies and its maritime industry will be crucial in shaping the future of global trade and currency dynamics [c4e60660].