China to protect inland shipping from foreign competition

SHANGHAI Oct 23 (Reuters) - China is to prohibit domestic companies from operating foreign-made ships on domestic waterways and will block foreign shipping service firms from selling services in China, according to regulations issued by China's State Council.

The rules protect the domestic shipping industry, hard-hit by overcapacity and slowing global trade, and could signal plans to restrict foreign companies from selling into upcoming waterway infrastructure projects approved as part of a 1 trillion yuan ($160 billion) spending package in September.

The rules, set to come into effect from Jan 1., prohibit "foreign companies, financial organisations and individuals from operating waterway transport services", the State Council said in an announcement on an official government website on Monday.

Foreign shipping service enterprises are also banned from hiring Chinese ships or shipping space, "or using other means to covertly operate waterway transport services".

Chinese operators are also restricted from using foreign boats, unless there is a shortage of Chinese ships and the company gets permission from the State Council.

Ships registered in the special governed zones of Hong Kong, Macau and Taiwan also need to adhere to the rules for foreign ships, unless given special exemption. ($1 = 6.2547 yuan) (Reporting by Shanghai Newsroom; Editing by Robert Birsel)