Gingerly Stepping between the Law and Practice:Implications of the Real Rights Law of China 2007 on the Shipbuilding Refund Guarantee

The Real Rights Law of China(2007) is an important step made by China towards the legalization of commercial reality.The statute may have a few far-reaching effects in practice beyond the contemplation of legislators. This article studies the possible implications that the Real Rights Law may have on the search for alternatives to the shipbuilding refund guarantee.The search is essential for the survival and development of Chinese shipbuilding industry, which is struggling in the world’s second position.The study shows that the Real Rights Law may realise the long redundant ship construction mortgage by way of charge of semi-finished industrial products or ’floating assets.’ Moreover,the statute may perfect the title transfer of newbuilding in the ’Taizhou Model’,a popular private financing structure for ship construction in Chinese rural areas.In practice,the ship construction mortgage and ’Taizhou Model’ are the most effective alternatives to the shipbuilding refund guarantee.Of course,whether the possible implications of the Real Rights Law could benefit the practice depends on Chinese administrators’ recognition,comprehension and implementation of the statute,which is yet to be observed.