China’s missing ships: the latest problem in the global supply chain

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Analysts said that as China prepares to enact data privacy legislation, they are beginning to notice a drop in shipping volume at the end of October.

Usually, shipping data companies are able to track ships worldwide because they are equipped with automatic identification systems or AIS transceivers.

The system allows ships to use high-frequency radio to send information to stations located on the coastline-such as location, speed, route and name. If the ship is beyond the range of these stations, information can be exchanged via satellites.

But this did not happen in the world’s second largest economy, a key player in global trade. According to data from VesselsValue, a global shipping data provider, the number of ships sending signals from the country has fallen by nearly 90% in the past three weeks.

Charlotte Cook, VesselsValue’s chief trade analyst, said: “We are currently seeing that China’s terrestrial AIS signals are declining across the industry.”

    A cargo ship seen at Shanghai Yangshan Deepwater Port in October last year. Shipping data companies said they had lost information about ships in Chinese waters in recent weeks.

New data law may exacerbate supply chain chaos

When asked about this, the Chinese Ministry of Foreign Affairs declined to comment. The State Council Information Office, which is the National Cabinet Information Office, did not immediately respond to a request for comment on why shipping suppliers were unable to access the data.

But analysts believe that they have found the culprit: China’s Personal Information Protection Law, which went into effect on November 1. It requires companies that process data to obtain approval from the Chinese government before allowing personal information to leave Chinese territory-a rule that reflects Beijing’s fear that the data will eventually fall into the hands of foreign governments.

The law does not mention transportation data. But Anastassis Touros, head of the AIS network team at Marine Traffic, a major ship tracking information provider, said that Chinese data providers may conceal information as a preventive measure.

“Whenever you have a new law, we have a time period and everyone needs to check if everything is normal,” Said the bull.

China is cracking down on data privacy.This is terrible news for some of the largest technology companies

Other industry experts have more clues about the impact of the law. Cook said her colleague in China told her that some AIS transponders had been removed from sites along China’s coastline at the beginning of this month under the direction of the national security department. The only system allowed to be reserved needs to be installed by the “qualified party”.

Not all data is gone: satellites can still be used to capture signals from ships. But Turros said that when a ship approaches the shore, the information collected in space is not as good as the information collected on the ground.

“We need ground stations to get better pictures, higher quality pictures,” he added.

As Christmas approaches, the loss of information from mainland China may cause more problems for the already troubled global shipping industry. Mainland China is home to six of the world’s 10 busiest container ports. As severely congested ports are unable to keep up with the rapidly rebounding demand for goods, the supply chain has been in a state of tension this year.
Moody's analysis said that the supply chain pressure is increasing and there is no sign of abating

According to Cook of VesselsValue, shipping companies rely on AIS data to predict ship movement, track seasonal trends, and improve port efficiency. She said the lack of Chinese data “may severely affect the visibility of the entire China’s marine supply chain.” The country is one of the world’s major importers of coal and iron ore, and it is also a huge container exporter.

“As we enter the Christmas period, this will have a very big impact on us [supply chains] Marine Traffic media strategist Georgios Hatzimanolis said that this is the most important factor at the moment. He expects that the loss of “every minute” ship data from China will have a significant impact on the “supply chain”, because the company may lose important information about the ship’s docking, unloading and departure time.

He added that the global supply chain is already under “huge pressure.” “No other factors are needed to make it more difficult.”

August Ningbo-Zhoushan Port. Experts worry that the lack of transportation data from China may put pressure on the global supply chain.

China’s self-isolation

It is not surprising that China wants to maintain absolute control over all data and information within its borders, because President Xi Jinping continues to reiterate the dominant position of the ruling Communist Party in all aspects of the economy and society.

Faced with external threats such as US sanctions on key technologies, the country has been promoting economic self-sufficiency.
Before and during the fierce trade and technology war with former US President Donald Trump, Xi Jinping emphasized his goal of self-reliance. For example, this is the focus of “Made in China 2025”, an ambitious plan that aims to push China’s manufacturing industry into more advanced technological fields.
China's largest private enterprise is in chaos.It's all part of the Beijing plan

Some senior officials in Beijing have recently tried to calm the concerns of global investors that China isolates itself from the rest of the world because it prioritizes national security.

China’s Vice President Wang Qishan, regarded as a trusted ally of Xi Jinping, said at the Bloomberg New Economic Forum in Singapore that China will not be “isolated from world development”. He also made a video speech, calling on countries to maintain a “stable and smooth” supply chain.

However, during the coronavirus pandemic, China has accepted policies that usually seem to be the opposite.

For example, during the pandemic, Xi Jinping redoubled his efforts to promote self-reliance, emphasizing the need to establish an “independent and controllable” supply chain to ensure national security.
This summer, China’s total suppression of technology extended to foreign IPOs, when China’s Cyberspace Administration of China proposed that large companies with more than 1 million customers seek approval before listing overseas. Like the recent data privacy laws, the agency expressed concern about whether the personal data held by these companies could be used by foreign governments.

However, if China goes too far in trying to protect itself from foreign interference, China’s actions this year may pay a price.

—— CNN Beijing Branch contributed to this report.

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