The construction of the world's largest shipyard, along eight kilometres of coast on Shanghai's Changxing Island, began yesterday and is expected to be completed to allow operations to start as early as the end of 2007, company sources have revealed.

The shipyard, located along the southern part of the island, at the mouth of the Yangtze River to the north of the city's Pudong District, will be fully operational by 2015 with an annual capacity of 8 million deadweight tons (DWT), according to China State Shipbuilding Corp (CSSC), the main developer of the project.

"It will be the largest (shipyard) in the world and it will also help CSSC become the world's top shipbuilder,'' said CSSC General Manager Chen Xiaojin.

The total investment for the project is estimated to exceed 30 billion yuan (US$3.6 billion) and foreign investment is welcome, Chen said yesterday.

Zhou Zhenbo, vice-general manager of CSSC, said the shipyard will be capable of churning out high-tech liquefied natural gas carriers, supertankers and even luxury liners.

Zhou said the gigantic shipyard will also help Shanghai become the world's largest shipbuilding base by increasing the city's current shipbuilding capacity from the current 3 million DWTs per year to 12 million DWTs by 2015.

As part of the massive project, CSSC will also relocate its two large Shanghai-based Jiangnan and Hudong shipyards to Changxing Island before 2010, according to Zhou.

The original locations of the two shipyards, on the banks of the city's Huangpu River, will be developed in line with Shanghai World Expo 2010 preparations, under a previous agreement between CSSC and Shanghai's municipal government.

The State Council, China's cabinet, outlined the country's ambitious shipbuilding development plan earlier this year -- to surpass Japan and South Korea by 2015 to become the world leader.

"That goal has put pressure on us, but we're confident in our ability,'' said Chen.

"The prospects for the country's shipbuilding industry in the coming years are fairly healthy.''

CSSC has also signed an agreement with the Guangzhou municipal government for 4.5 kilometres of coast to house a 3-million-DWT shipyard, according to Chen.

Operating directly under the guidance of the nation's cabinet, CSSC has built 2.14 million DWTs of ships in 2003, a year-on-year increase of 102 per cent.

Also according to statistics released yesterday, the company clinched 8.7 million DWTs of shipbuilding orders this year, an increase of 253 per cent over 2002.

CSSC is expected to build more than 3 million DWTs of ships in the coming year, positioning it among the world's top five in shipbuilding, a company source said.

China's shipbuilding industry has witnessed a rapid growth since the early 1990s, with an annual average growth of around 17 per cent.

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