A fuzzy set theory approach to flagging out: towards a new Chinese shipping policy

The paper seeks to model the benefits and costs involved in the decision to flag out, and to provide arguments for alternative policies, aiming to counteract this age-long phenomenon. Based on the analysis of the evolution of worldwide and Chinese flagging out, the emphasis in the paper is on the comprehensive effect assessment of flagging out and the required adjustment of Chinese shipping policy. To identify the determinants of such an adjustment, the paper introduces fuzzy set theory and related models, aimed to assess the economic effects of flagging out through the use of context-dependent economic and societal indicators (factors). The degree to which such indicators contribute to the choice of flag decision is assessed through a questionnaire survey. In parallel, and in the context of the determinant analysis of fuzzy models, the paper probes into the ‘policy competition’ and ‘government intervention’ policies to counteract flagging out. In the same context, a comparative analysis of shipping policies between China and traditional maritime countries is undertaken, in order to assess the current ‘openness’ of the Chinese shipping policy and explore possible policy alternatives. The paper concludes that the preferred policy alternative for China would be the establishment of second international ship register.