Executives at China Shipbuilding Corporation (CSSC), a giant Chinese shipbuilding company, are reportedly under investigation for alleged financial misconduct and other violations. Caixin International, a Chinese media outlet known for investigative journalism, reported in a June 5 report that financial executive Li Chaokun is the target of the investigation. China's shipbuilding industry is already under pressure after the United States launched a trade investigation into business practices in the shipbuilding industry.
Caixin reported that the former chairman of the People's Bank of China's financial department is under investigation for “suspected serious breaches of discipline and law,” which it described as a euphemism often used by the Communist Party for corruption.
He led Nakagawa Finance Co., Ltd., a financial institution and subsidiary of CSSC, in 2019 and 2020. The company is responsible for assisting various shipyards within CSSC in raising capital, lending, and other financial transactions. It also handles foreign exchange transactions.
Li was reportedly last seen in public in late April. CSSC's website shows him, in his role as secretary of the CSSC Shipping party committee, representing the company at meetings including the Global Maritime Forum and the Hong Kong Shipowners' Association. Li also presided over the naming ceremony for a new ship. Hafnia Lillesandthe new LRII, an LNG-fuelled tanker.
Caixin reported that the crackdown is ongoing, with a particular focus on the ship finance leasing sector. It said several senior executives at CSSC were under investigation for alleged financial misconduct.
Last year, a Shanghai court sentenced Hu Wenming, the former chairman of China Shipbuilding Industry Corporation (CSIC), to 13 years in prison after a three-and-a-half-year investigation on charges of accepting bribes and misusing power. Hu held various senior positions and is credited with helping secure the merger of CSSC and CSIC in 2019.
These moves come as the United States begins to investigate the operations of Chinese shipbuilding companies. U.S. Trade Representative Katherine Tai confirmed in April 2024 that her office would open an investigation into China's shipbuilding industry. Chinese officials quickly responded, saying the investigation was not based on facts, but the U.S. Trade Representative was following a petition filed by some of the largest labor unions in the United States. The petition alleges that unfair and non-market policies and practices, including financial, are being used to strengthen China's role in the shipbuilding industry and reduce competition.
China has been moving aggressively to expand its leadership in global shipbuilding. This year, China has strengthened its leadership over South Korean shipyards, receiving 70% of global orders in some months. As it is becoming harder to compete for basic tanker and bulk carrier contracts, South Korea has reportedly decided to focus on higher-value work. South Korea is seeking to take the lead in LNG ships and emerging areas such as ammonia fuel and autonomous sailing.
