Investigation of high-ranking CSSC financial manager for corruption

Another senior executive at Chinese shipbuilding giant China State Shipbuilding Corporation (CSSC) is reportedly under investigation for financial irregularities and other possible violations. Caixin Global, a Chinese media outlet known for its investigative journalism, published a report on June 5 saying that senior financial executive Li Chaokun was under investigation. This comes as Chinese shipbuilding is already under pressure as the US has launched a trade investigation into the industry’s business practices.

According to Caixin, the former chairman of one of the CSSC’s financial branches is being investigated for suspected “serious violations of discipline and law.” Caixin explains that this is a common Communist Party euphemism for corruption.

In 2019 and 2020, he headed Zhong Chuan Finance Co., a financial institution and subsidiary of CSSC. The company is responsible for raising funds, as well as loans and other financial transactions for the various shipyards within CSSC. It also handles foreign exchange transactions.

Li is said to have made his last public appearance in late April. On the CSSC website, he can be seen representing the company at a meeting with the Global Maritime Forum and the Hong Kong Shipowners Association, as well as others in his capacity as Secretary of the Party Committee of CSSC Shipping. He also presided over the christening of the newly built Hafnia Lillesanda new LRII tanker with LNG propulsion.

Caixin reports that a crackdown is currently underway, with one element particularly focused on the ship leasing sector. The report says that several senior CSSC officials have been investigated for allegations related to financial matters.

Last year, a Shanghai court sentenced former China Shipbuilding Industry Company (CSIC) chairman Hu Wenming to 13 years in prison after a three-and-a-half-year investigation for bribery and abuse of power. He held various senior positions and was recognized for helping to organize the merger of CSSC and CSIC in 2019.

All this comes as the United States has begun investigating the dealings of Chinese shipbuilders. U.S. Trade Representative Katherine Tai confirmed in April 2024 that her office would launch an investigation into China’s shipbuilding industry. While Chinese officials were quick to respond, calling it an investigation without facts, the trade office followed a petition filed by several of the United States’ largest labor unions, alleging that unfair, non-market policies and practices, including in finance, are being used to boost China’s role in shipbuilding and reduce competition.

China is aggressively trying to expand its leadership in global shipbuilding. This year, the country has extended its lead over South Korean shipyards, taking 70 percent of global orders in some months. The Koreans have reportedly decided to focus on the high-value orders because it has become too difficult to compete in basic tankers and bulk carriers. South Korea is trying to establish a leadership position in LNG tankers and in emerging segments such as ammonia-powered and autonomous ships.