Construction started Friday on what is to become the largest shipyard in the world, marking a major step forward in China's ambition to become the world's leading ship builder.

In the first phase of the 3.6-billion-US-dollar project, the Jiangnan Shipyard Corp., a subsidiary of China State Shipbuilding Corporation (CSSC), is moving to Changxing Island to make way for Shanghai Expo 2010, China Daily reported Saturday.

The Jiangnan Shipyard will expand its shipbuilding capacity from the current 800,000 deadweight tons a year to 4.5 million by 2020, it said.

In the second phase of the project, other CSSC subsidiaries, including Hudong and Waigaoqiao, will add more yards along Changxing Island's eight-kilometer coastline.

By 2015, CSSC is expected to have an annual capacity of 8 million deadweight tons, half of China's current production capacity.

By then, Shanghai will also become the world's largest shipbuilding base, tripling its capacity to 12 million deadweight tons, said the English language newspaper.

"The central government has called on China to become the largest shipbuilder in the world. The Changxing base is the most important step forward in this plan," it quoted CSSC General Manager Chen Xiaojin as saying.

Friday also marked the 140th anniversary of the Jiangnan Shipyard, which was founded in the late Qing Dynasty as China's first manufacturing base for steel, naval ships and steel cannon.

Shipbuilding has since been a vital industry in China as it boosts domestic manufacturing and machinery industries, creates job opportunities and revenue, and improves the country's naval capacity.

The country's shipbuilding industry has achieved an annual average growth of 17 percent over the past few years and China now accounts for a quarter of the world's shipbuilding market, up from less than five percent five years ago.

Source: Xinhua