Containerships and Shipbuilding: China Leads Yuan's Internationalisation

China's Landmark Containership Deal

A prominent state-owned Chinese shipbuilder has taken a bold step in the internationalisation of the yuan by signing a deal to construct containerships that aims to reshape trade.

Hudong-Zhonghua's Strategic Agreement

China's Hudong-Zhonghua Shipbuilding, part of China State Shipbuilding, has partnered with Hong Kong-based Seaspan Corporation in a groundbreaking contract to build six containerships, each with a capacity of 13,600 TEUs. This contract is significant as it is the first of its kind settled in yuan, marking a pivotal shift in global shipping practices.

Implications for Shipowners

• The deal is expected to reduce foreign-exchange risk for Hudong-Zhonghua.
• Financing costs will decrease for shipowners, promoting sustainability and efficiency in trade.
• Delivery of the ships is slated between 2026 to 2028, aligning with global energy goals.

China's Role in Global Shipbuilding

Despite challenges, China shows resilience in the shipbuilding industry, outpacing South Korea with substantial increases in orders and completions this year. It now accounts for a significant portion of global market activity.

Currency Landscape in Global Trade

Given the yuan's current standing as the fourth-most-active currency for global payments, this deal represents a critical advancement in China's efforts to bolster its currency's international usability in trade transactions. This could potentially shift trading practices towards more internationalisation of the yuan, strengthening China's economic influence on the world stage.