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China shipbuilders cast off Russia, yielding to Western sanctions after blacklisting

  • Even with Russia emerging as a boon for Chinese shipbuilders, a market bonanza appears unlikely as trade restrictions keep growing and ‘self-sanctioning’ occurs

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This 20-year-old image from a shipyard in Shanghai shows China in the very early stages of trying to bridge the technological gap with South Korean competitors. Photo: Reuters
Frank Chenin ShanghaiandRalph Jenningsin Hong Kong

Some Chinese shipbuilders who saw opportunity in anchoring their business to orders from Russia are being forced to adapt amid pressure from Western sanctions imposed on Moscow, with shipyards in eastern China severing long-standing ties with their Russian buyers in recent weeks, according to a major company and domestic media reports.

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The moves come two years after five Chinese companies were told they would need to stop work on Russia’s Arctic-LNG 2 project in northern Siberia, due to sanctions from the European Union, according to the Norway-based energy industry publication Upstream. But at the time, the situation was seen to be “changing every day”.

Among those five entities was Wison New Energies, a Shanghai-based firm that now says it has “decided to discontinue all ongoing Russian projects and will immediately and indefinitely stop taking any new Russian business”.

In an English post last week on LinkedIn, which no longer has a presence in China, the company appeared to convey a message of compliance to the Western world – as it came just weeks after one of the other four entities named two years ago, the Shandong-based Penglai Jutal Offshore Engineering Heavy Industries, was blacklisted by the US Treasury Department for dealings with Russia.

“We appreciate the good relations we have built with our Russian partners in the past and value the work we have done together,” the Wison statement says. “However, in view of the strategic future of the company, we have to make this difficult decision.”

Analysts say the trend illustrates how Chinese companies have become collateral damage as the West steps up efforts to penalise Russia for its war in Ukraine, and as sanctions disincentivise business with Russia.

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