Mr Chen Bin an official from the National Development and Reform Commission the country's top economic planner said that shipbuilding industry faces a severe situation after the financial crisis in 2008, due to the dwindling global shipping market, declining prices and overcapacity, and the industry needs to urgently conduct restructuring and technology upgrade.
Mr Chen said that China's shipbuilding industry depends too much on external demand, as 80 percent of the ships are made for exports.
Figures from the NDRC show that currently there are about 1,600 shipbuilding firms and the annual industrial output is nearly CNY 800 billion (USD130.56 billion).
However, the new orders have been shrinking since the fourth quarter of 2008.
Mr Chen said that the industry is facing a serious overcapacity amid global competition.
On July 31, the State Council, the cabinet, rolled out a plan intended to control new capacity and weed out outdated capacity. The plan is part of a series of government measures to curb capacity growth in industries that are suffering from a supply glut.