The role of China in the global shipping industry, with emphasis on the dry bulk market

Abstract

This paper examines the role of China in the development of the global maritime industry, focusing on the dry bulk market. The gradual reforms of the Chinese economy starting from the late 70s until the country's accession to the World Trade Organization in 2001 triggered an unprecedented growth of all sectors of the shipping industry, with the dry bulk sector being in the epicentre of the trading boom. China became one of the main driving forces of the demand and supply of ship transportation. An econometric model has been developed to test the validity of the theoretical analysis. Through a multiple regression model, a series of Chinese economy-related variables, potential drivers of the demand and supply of ship transportation, have been estimated as to their effect on the dry bulk market earnings using the OLS technique. Six of these factors, including the Chinese industrial production growth, the Chinese dry bulk seaborne imports, the Chinese-owned dry bulk fleet and the Chinese shipyards' output, are proved to be statistically significant determinants of the dry bulk vessels' earnings. The evaluation of the regression results provides sufficient comfort in relation to the validity of the conclusions.