India’s immediate and extended neighbours—Bangladesh, Thailand and Malaysia—have decided to go slow on seeking China’s support for their ships in both civilian and defence sectors.
The Covid-19 pandemic has slowed down the pace of China’s shipbuilding industry over the last few months and Beijing’s partners in South and Southeast Asia have decided to limit cooperation due to budget constraints, ET has reliably gathered.
This could impact China’s long-term strategic ambitions in the Bay of Bengal where India has been the traditional net security provider. However, over the last decade, China has been making attempts to challenge India’s position through investments in ports, supply of naval vessels and shipbuilding in parts of South and SE Asia.
Orders at China’s shipyards fell 5.6% year-on-year in the first quarter of 2020, according to the country’s ministry of industry and information technology.
Post-Covid, many client countries where Chinese shipyards have ongoing business cancelled visits to China and banned entry of Chinese nationals to their countries, persons familiar with the sector told ET. Further, production timelines are universally lagging across China. Co-location of military design institutes with the Wuchang Shipyard at Wuhan has directly affected naval projects also.
With regard to projects under implementation, estimates indicate losses roughly to the tune of 800 million yuans in export projects for Malaysia and Bangladesh navies alone, ET has learnt. Bangladesh and Malaysia are also limiting scope of cooperation due to budget constraints, sources hinted.
Military budget cuts in Thailand owing to Covid have halted its plan to buy two modified export versions of the Yuan Class (Type 041) submarines, worth 22 billion bhats from China, sources informed. There are also forecasts of the probability of China losing new international shipping contracts to Japan and South Korea.
China’s shipbuilding industry has, in some ways, mirrored China’s rise in the global order since the 1990s. The industry is also illustrative of the symbiotic nexus between the civilian economy and the defence industrial complex in China.
However, owing to the opaque manner in which the government-military-industry complex functions in China, an accurate assessment on quality has not been possible, according to experts who follow this sector.