Will China Let a State-Owned Oil Tanker Company Sink?

BEIJING (TheStreet) -- Chinese stock investors are shouting "mayday" now that a shipping company with a fleet of oil tankers is about to become the first state-owned enterprise to delist from a domestic exchange.

But Nanjing Tanker, also known as Changjiang National Shipping Group, is expected to sink in two weeks without the Chinese government bailout that many stock investors have been demanding.

Last month, authorities let investors take a hit when Chaori Solar Energy became the first bond issuer to default on an interest payment in China.

Nanjing Tanker's demise is a sign that the Chinese government is apparently no longer willing to keep every inefficient, money-losing state company afloat for the sake of jobs and investors.

The communist government's long-time emphasis on maintaining "social stability" -- that is, keeping workers employed and investors happy at any cost -- has prompted bailouts in the past. In January, for example, a state bank was apparently among the unnamed financiers that rescued a coal mine trust product from impending default for the sake of 700 retail investors.

Beijing's social stability policy may have played into a Nanjing Tanker decision late last year to expand its fleet by buying 20 crude oil carriers, including supertankers, despite years of losses.

The company, a division of the state cargo shipping conglomerate Sinotrans & CSC Holdings, reported losing 5.9 billion yuan -- nearly US$ 1 billion -- in fiscal 2013. Its customers have included oil giants Exxon Mobil (XOM), Royal Dutch Shell (RDS.A) and Sinopec (SHI).

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