The surplus shipbuilding capacity in China will take at least five years to be digested, pointing to a gloomy outlook in 2014, according to Zhang Guangqin, president of China Association of the National Shipbuilding Industry (Cansi).

Zhang noted that the irrational expansion of shipbuilding capacity and production lines have severely hurt profitability in the sector.

China's shipbuilding sector is expected to continue to lag behind its foreign competitors as prolonged excess capacity slashes earnings and drives smaller yards out of business.

“Surplus capacity of the world's shipping industry has mounted since the global financial crisis in 2008. The estimated overcapacity of the sector may reach as high as 20% this year. Under the circumstances, it will take at least five years to digest the surplus capacity in China's shipbuilding sector,” Zhang told China Daily.

China currently has in excess of 1,600 shipbuilding enterprises, which boast an annual industrial output of some RMB800bn ($130.6bn) and a workforce of around 1.5m people, according to the National Development and Reform Commission (NDRC).

“Even though China gained more orders than Japan and South Korea in 2013, new ship prices have kept touching new bottoms in the past two years, and there is no sign of recovery whatsoever,” Yin Zhen, deputy director of the division of transport planning at the Institute of Comprehensive Transportation at NDRC, was quoted saying.