Planet Tracker report on China’s deep-sea fishing fleet – China is the uncontested world fishing power, with a global share that has quadrupled since 1950, reaching 14.3 percent in 2022. An important component of this expansion is the deep-sea fishing fleet, which caught 2.33 million tons of seafood in 2022. However, this fleet is now in the spotlight not only for its fishing volumes, but also for its environmental and social impacts.
The economic situation of the Chinese fleet
According to Planet Tracker’s Fishful Thinking report, the financial situation of China’s offshore fishing fleet is poor. Of the 147 owners of the 1,446 vessels analyzed, the estimated average gross margin is 14 percent, with at least 45 percent of profits coming from subsidies. The most profitable operations, such as the tuna purse seine fishery, are state-owned, while the least profitable, such as the squid fishery, are fragmented and privately owned.
This lack of profitability has serious consequences. For example, the squid fishery would be heavily loss-making if crew wages were aligned with Chinese standards. This financial strain could also push companies into illegal activities to increase revenues, as in the case of the squid fleet off South America.
Climate change and legal issues
Climate change and legal issues are affecting the finances and sustainability of the fleet. Tuna in the exclusive economic zones (EEZs) of the Western and Central Pacific island states is a major source of profit for the Chinese fleet. However, climate change will likely reduce the biomass of tropical tuna, pushing them into international waters, which could lead to an increase in illegal, unreported and unregulated (IUU) fishing or labor abuse on some Chinese vessels.
In addition, a reduction in subsidies is likely with the entry into force of the WTO agreement on fisheries subsidies. China’s current incentive system does not fully reflect this agreement, which could further worsen the financial situation of the fleet.
The need for an ambitious transition plan
To address these challenges, China needs to change its incentive system, particularly the “compliance subsidy” system. Rewarding traceability and transparency and adequately penalizing illegal fishing and labor abuse could increase the industry’s future profits and reduce the impact on ocean health and coastal communities.
The role of financial institutions
Financial institutions can support this transformation. By engaging companies on transparency, traceability, monitoring, sustainable sourcing, and workers’ rights, they could reduce fishing risks and improve future profits.
To finance this transition, China could issue a sovereign bond linked to sustainability, the “Hai Feng Bond.” This financial instrument could help achieve 100 percent monitoring and tracking coverage aboard China’s deep-sea fishing fleet, greatly improving ocean health.
The future of China’s deep-sea fishing fleet depends on swift and radical action. Without significant changes, the fleet will continue to see its profitability erode, increasing the risk of illegal fishing and other abuses. It is therefore crucial to act now to ensure a sustainable future for both the fishing industry and the health of the oceans.
Planet Tracker report on China’s deep-sea fishing fleet
