The move is also expected to assist the nation after it joins the World Trade Organization, according to the Ministry of Communications.

Official ministry figures indicate that 41 percent of inland ships are relatively old. In coastal regions that proportion is as high as 68 percent. This poses potential safety hazards in addition to causing low efficiency.

The State Council has agreed to channel part of shipping taxes back to local shipping companies in the future to help them buy new vessels.

Companies that work actively to replace aging shipping could also be granted special subsidies from the central government.

To advance this process, the ministry plans to intensify inspections of imported secondhand foreign ships, which supply fleets in many places.

The ministry said it will examine relatively old ships several times a year. Any vessel that fails to pass compulsory tests will not be allowed to work.

The administrative departments of China's shipping industry are also expected to undergo drastic reforms in the next few years. These aim to create sound market conditions rather than get such departments directly involved in shipping companies' daily business.

The ministry has urged local shipping companies to abandon their planned economy approach and react to market demands.

The ministry and local governments will also cut administrative ties with companies, leaving them to survive themselves through reforms.

The ministry suggested that mergers and acquisitions of domestic shipping companies might help them compete with foreign business rivals in the international shipping market in the future, said the paper.

(China Daily 03/26/2001)