[Click eStock] Will China's Government Stimulus Positively Impact Korea's Shipbuilding Industry?

Based on Past Cases, Dual Aspects Exist
High Possibility of Benefits for Equipment Suppliers
"Must Prepare Thoroughly Based on Past Experience"

Recently, the Chinese government announced a large-scale economic stimulus package, which is expected to have a significant impact on South Korea's shipbuilding industry. While China's determination to recover its economy is likely to lead to a rebound in South Korean export volumes, the situation in the shipbuilding sector cannot be viewed as purely positive. Accordingly, Hana Securities Research Center analyzed on the 7th the potential effects of China's stimulus package on the domestic shipbuilding industry.

Wigyeongjae, a researcher at Hana Securities, stated, "The scale of China's current stimulus package is about 3 trillion yuan, which is similar in size to the large-scale economic stimulus package of around 4 trillion yuan in 2008." He added, "There are also similarities in the severity of the economic downturns and the methods of capital injection into state-owned banks between the two periods." After the 2008 stimulus package was announced, the stock prices of the domestic shipbuilding industry in 2009 showed different trends. The stock prices of Chinese shipbuilders surged sharply, while those of South Korean shipbuilders remained sluggish. This is interpreted as a result of intensified competition among Chinese shipbuilders, which increased pressure on South Korean shipbuilders. On the other hand, equipment suppliers saw their stock prices rise due to increased demand driven by China's economic stimulus.

Hana Securities analyzed that while there is a possibility that China's current economic stimulus package could reproduce similar patterns in 2025, new changes should also be considered. The main factor driving the current shipbuilding boom is energy transition. Demand for LNG and LPG carriers is increasing, an area where South Korean shipbuilders still hold strong advantages. In the process of ship engines transitioning to Dual Fuel in accordance with IMO (International Maritime Organization) regulations, LNG Dual Fuel engines produced by domestic engine manufacturers could become essential components even for Chinese shipbuilders.

Researcher Wigyeongjae said, "Ultimately, South Korean shipbuilders are likely to face intensified competition with Chinese shipbuilders in the container ship sector, but they are expected to maintain their superiority in the gas carrier sector." He added, "As in the past, equipment suppliers are likely to benefit from increased demand, especially with expected growth in engine supply." He further noted, "China's economic stimulus policies are expected to have a significant impact on the South Korean shipbuilding industry, and it is necessary to prepare for future changes based on lessons learned from past experiences."