China will continue to cut down on the vast number of shipyards in an ongoing effort to put its industrial growth back on a healthy path this year, a senior government official said.

Li Dong, deputy-general at the department of equipment industry at China's ministry of industry and information technology, said the country will clamp down on the opening of new shipyards, docks, berths and maintenance facilities.

“Blind investment activities in the shipbuilding sector must be restrained, especially in the regions of the Bohai Bay, Pearl River Delta and Yangtze River Delta,” Li was quoted saying in China Daily.

He added that “capable shipyards will be supplied with technical and financial assistance to develop high-end ships and offshore engineering products to catch up with rivals such as South Korea and Singapore.”

Li warned that unqualified shipyards should not even think about producing offshore engineering products such as oil rigs and offshore pipelaying vessels for foreign shipowners. “Small and medium-sized shipyards without orders or with a few orders will gradually withdraw from the market over the next five years,” he said.

China is the largest shipbuilding country with some 1,600 shipbuilding-related enterprises, including 800 large shipyards, accounting for an annual industrial output value of approximately RMB800bn ($130bn).

Newbuilding orders reached 69.84m dwt in 2013, a jump of 242% year-on-year and existing orders totalled 131m dwt, up 23% from a year ago.

Zhang Guangqin, president of China Association of the National Shipbuilding Industry, said: “Even though China received more orders than Japan or South Korea last year and this year, new ship prices hit rock bottom over the past two years, and there is no sign of recovery. It will take another five years for overcapacity to be eased.”

Major shipbuilding provinces, meanwhile, are taking actions to cut their shipbuilding capacity. Shanghai announced earlier this month that it will cut its shipbuilding capacity to 12m dwt before 2017 while Jiangsu province aims to reduce to 10m dwt from 25m dwt in the next five years.

In addition, the development and reform commission of Zhejiang province is drafting a plan to consolidate large shipyards and eliminate small and bottom-rung yards within five years.