The Chinese shipping market has removed around 4.2m dwt of elderly vessel tonnage in the first half of this year, bringing about a tighter market amid the industry slump, according to He Jianzhong, China’s deputy minister for transport.

The removal of the excess tonnage was largely a result of the country’s ship scrapping policy revealed in December last year, where the government will offer subsidies of RMB1,500 ($247) per gross tonne to shipowers that scrap their vessels before their operational expiry dates.

The subsidies would be given in two tranches – one upon the completion of the vessel demolition and another after the construction of the new replacement vessel.

He also pointed out that Chinese owners have booked 9m dwt in capacity of newbuildings during the first six months, partly to replace the scrapped tonnage and for fleet renewal.

“This is the major adjustment to the structure of China’s shipping fleet,” He was reported saying.

While Beijing’s ship scrapping policy may have helped to enhance China’s overall fleet structure to a certain extent, the global shipping market remains under pressure from surplus capacity, he added.