As China's economic slowdown squeezes the global shipping industry, three of the country's biggest domestic cargo freighters likely skirted the losses that plagued international peers last year thanks to a five-fold jump in state subsidies.
Boosted by hundreds of millions of dollars in cash grants from Beijing for scrapping old vessels, China Cosco, China Shipping Development and China Shipping Container Lines will report 2014 earnings starting later on Thursday showing some of their best profits in years.
But industry insiders and analysts say Beijing's support for national firms as its economy slows is the only factor that kept the firms out of the red, creating a dependence on support that will be sustained with no industry upturn in sight. For the International Chamber of Shipping, representing the global merchant fleet, the aid artificially boosts shipbuilding just as the sector faces a surplus of ships.
The three firms, backed by state-owned companies China Ocean Shipping Group and China Shipping, received at least 2.4 billion yuan ($359 million) in subsidies over 2014, a five-fold increase compared to the previous year, according to Reuters calculations based on company filings.