China may be leaving some fishers out of gas

China's Ministry of Finance (MOF) surprised many last week when it announced a cut to the fuel subsidies China pays its fishing fleet and aquaculture sector. Subsidies will be cut by 40 percent against 2014 levels by 2019, the Ministry of Finance and Ministry of Agriculture announced in a joint statement.

This is considerable, given China paid CNY 24.2 billion (USD 3.9 billion, EUR 3.38 billion) in fuel subsidies in 2014, according to official statistics. Under the new regime 20 percent of subsidies will be issued in the form of payments to scrap and convert vessels. Local governments (who administer the subsidies) will also be required to use subsidies to help fishermen switch to other businesses.

The new reforms appear to be part of a privatization drive by the Chinese government, which is seeking to slash back the state sector and let private enterprise and competition reboot the economy. A slowing Chinese economy also means the government is less keen to hand out fishing-related subsidies, particularly given the country’s own waters are dangerously overfished.

This should be good news for overseas competitors who have long accused China of unfairly subsidizing its fisheries sector. International critics and competitors have criticized access to government funding in the form of fuel subsidies as unfair competition, allowing giant firms like China National Fisheries Co (CNFC) to catch species like tuna in locations and conditions which are unfeasible for private, commercial firms.

Fishing vessels getting cheap fuel have emptied the seas around China since the low cost of fuel allows them to work when more economic operators would have to stay in harbor. On the high seas fishermen have complained that the fuel subsidies have led to a wave of Chinese trawlers chasing limited supplies of fish.

It’s not clear how subsidy cuts will impact the long distance fleet, a priority for China’s government. There is a high probability that Chinese subsidy reform will merely shift China’s fishing trawlers elsewhere, with funds used to build new or bigger boats based in western Africa, Latin America and parts of the South China Sea where China is seeking to maintain territorial claims.

Key Chinese port cities, which typically have a large stake in building up and running fleets, have already been shifting their focus to long-distance fishing, with subsidies handed out to build new vessels (which are in turn often operated by state-run firms). CNFC Overseas Fishery Co., the listed arm of China National Fisheries Co., has meanwhile pledged to increase its acquisitions of overseas fishing companies to reboot the firm’s fortunes after profits nosedived in 2014.

China’s top fisheries official has vowed to make China the world’s top fisher of the high seas. China will continue to invest in its long-distance fishing fleet and fishing equipment in order to increase the nation’s “extraction of fisheries resources on the high seas,” said Yu Kangzhen, China’s vice minister for agriculture with responsibility for fisheries, speaking an event in Beijing earlier this year to mark 30 years of the development of China’s long-distance fishing fleet.

China, according to Yu, has increased its catch four-fold since 2000. Remarkably, in the past 30 years China has increased the scale of its long-distance fishing 300-fold, catching 2 million metric tons (MT) in 2014: that compares to 2,600 MT in 1985, claims Yu Yangzhen. The country fished CNY 18.5 billion (USD 2.96, EUR 2.59 billion) worth of fish from the high seas in 2014, a 4,000-fold increase on 1985 figures.


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