ONE of the most striking maritime developments in China during the 1980s was the substantially increased dependence on imported ships in expanding the country's merchant fleet (Figure 8.1). Given China's ability to build basic ships in series by the end of the 1970s, shipbuilding officials and foreign maritime observers had expected that Chinese yards would find themselves concentrating on the growing needs of the domestic merchant fleet. Given the tremendous expense of new ships (while falling, prices ranged from U.S. $20–100 million at the time, depending on the size and type of ship), it was doubly surprising that China began to rely increasingly on the purchase of new, rather than second-hand, ships in the world market (Figure 8.2).

Why did COSCO place orders overseas for ships that CSSC's yards were able to produce at home? Indeed, only certain orders for high-tech ships can be explained simply by a lack of capability in China. This puzzle, central to the development of China's shipping and shipbuilding industries, has gone largely unanswered. Commenting on China's imports and exports of cargo ships in 1986, Irwin Heine, an internationally renowned maritime observer, declared that “it is a curious dichotomy in China's shipbuilding policy that CSSC exports the types of ships COSCO needs and [COSCO] will turn around and import the same types from foreign shipbuilders.”