The leasing arms of at least two major Chinese banks are in discussions with regulators about converting shipping leases into mortgages, as Beijing braces for new U.S. fees that could challenge China’s dominance in global maritime trade, Bloomberg reported, citing people familiar with the matter.
Talks with the National Financial Regulatory Administration (NFRA) began last month after lessors and shipowners raised concerns over the potential financial hit from Washington’s plan to levy fees on Chinese ships. Under the proposal, lease contracts would be shifted to the books of parent banks as mortgage loans — a rare move in China, given that shipping portfolios have traditionally been treated as risky assets. The NFRA has not yet made a decision.
The urgency stems from U.S. measures announced by President Donald Trump in April that will impose multimillion-dollar charges on Chinese-built and Chinese-operated vessels calling at American ports starting October 14. The levies, intended to revive the U.S. shipbuilding industry, will be assessed per voyage based on cargo volume, with the steepest costs targeting Chinese-owned ships.
Chinese leasing companies have become dominant players in the global shipping finance market, filling a void left by Western banks over the past decade. They held $99.3 billion in shipping assets as of last year, according to Clarkson Research Services. Such assets typically make up between 10% and 40% of their portfolios, S&P Global noted in an August report.
Converting leases into mortgages would shift risk from lessors to shipowners or vessel operators, who would bear repayment responsibility. For banks, however, the move would expose them to potential credit losses and lengthy recovery proceedings in the event of defaults. Mortgages also carry shorter tenors — often capped at five years compared to lease contracts that can last a decade or more.
The proposal highlights Beijing’s effort to cushion the industry from geopolitical pressures as U.S.-China trade frictions evolve. While concerns over a full-scale trade war have eased since April, leasing firms continue to seek ways to adapt. Some have suggested shipowners adjust pricing on vessels avoiding U.S. ports while mortgaging ships expected to call at America, according to people familiar with the talks.
The NFRA did not respond to a request for comment.
