China's geopolitical influence on the maritime industry

• Main Author: Chan, Lin Si
• Other Authors: Chiu Sai Hoi, Benson
• Format: Final Year Project
• Language: English
• Published: Nanyang Technological University 2023
• Subjects: Engineering::Maritime studies
• Online Access: https://hdl.handle.net/10356/172612
• Institution: Nanyang Technological University

The maritime industry is highly vulnerable to geopolitical risk (Kotcharin & Maneenop, 2020) and in recent years the potential for global geopolitics to disrupt maritime trade is on the rise. With China emerging as a dominant force in the global stage, this report seeks to investigate the various impacts of China’s geopolitical influence on the maritime industry, covering areas from trade projects and economic collaborations to territorial disputes and pandemic responses. The aim of this report is to provide insights and prepare maritime businesses, especially those operating in Southeast Asia for potential economic disruptions caused by China’s geopolitical influence. To answer the research gap, primary and secondary data were collected to ensure consistency and reliability of the research findings. The primary data consisted of survey questions and six interviews, while the secondary data consisted of journal articles and credible websites. Upon analysis of the data, the report finds that the Belt and Road Initiative (BRI), with its extensive network of infrastructure projects has the potential to increase trade, reduce shipping time and costs, increase port operations and marine insurance premiums, and lastly strengthen the Renminbi (RMB) currency. The Regional Comprehensive Economic Partnership (RCEP) has the potential to improve trade relations, facilitate import and export processes and create more resilient supply chains within the Asia-Pacific region. Conversely, the South China Sea (SCS) dispute has the potential to cause a global economic downturn, disrupt fisheries, raise military expenditures, increase insurance costs and cause shipping lanes to re-route. Lastly, China's abrupt response to COVID-19 has caused a disruption to supply chains, though as China pivots towards a growth-focused recovery, a rise in iron ore and steel import is expected, driving up demand for dry bulk carriers. The increased demand for goods and services, together with supply chain strains is anticipated to drive up freight rates and inflation. To prepare and mitigate such risks, the author proposes recommendations base on a scenario whereby China continues to exert its influence on the industry. The recommendations include strategic planning across short, medium and long-term horizon, with an emphasis on trade route diversification and continuous framework improvement. Followed by leveraging the use of technology, diversifying revenue streams by investing in related industries such as other logistic services and strengthening market presence through strategic alliances. Lastly, this report includes limitations regarding the nature of the study constantly changing with new headlines appearing and the lack of diversity in survey participants background and the limited number of interviewees which is not a holistic view of the industry.