1. CONDITION SURVEYS ON VESSELS
　　It is the general principle of the Association in respect of loss prevention to insist on pre-entry condition surveys and routine inspections of entered vessels and especially on random examinations of the aged vessels and vessels which have a high incident of accidents.

　　In 2002 policy year, the Managers carried our surveys on 41 vessels of which 26 were pre-entry condition surveys and 15 reexaminations or routine inspections. There was a decrease of 7 vessels (in total), 2 vessels (pre-entry condition surveys) and 5 vessels (routine inspections or reexaminations) respectively as compared with last year.

　　By the surveys, inspections and examinations carried out by the Managers, we can see that the overall conditions of the vessels newly entered into the Association in 2002 policy year are better than those of the vessels entered in the previous years. However, there is no significant improvement of overall conditions of the total vessels entered, as among the newly entered vessels with exception of a few new-buildings many are second-hand vessels purchased by the Members. By the surveys carried, we can see also that:

A. Although most of the vessels entered into the Association in 2002 are old vessels, the average age of them is 5 years younger than that of the vessels withdrawn from the Association.

B. Entered Vessel's conditions have been noticeably improved due to the pre-entry condition survey policy executed by the Association and strict port state control inspections on vessels. But, there is no apparent improvement in ship management and crew quality.

C. The pre-entry surveys were mainly imposed on second-hand vessels that were newly brought in by some Members in 2002. These vessels were timely arranged by the Association after taking delivery by the shipowners and the defects or inadequacy of which were duly repaired and amended in time in accordance with the recommendations of the surveyors and requirements of the Association. By passing through the reexamination (even more than twice for some individual vessels), most of the vessels were thus exempted from some restriction clauses.
D. Most of the crew on board the entered vessels are employed from outside of the company and the quality of them is relatively low. They lake necessary links with the employer company and seldom report or reflect information concerned in time.

E. Some shipowners, in view of saving costs, are not willing to have the aged vessels thoroughly repaired. In order to safeguard the interests of all the Members, a warranty clause has to be inserted and adopted when effecting underwriting.

F. The fact that the inspections carried by the international clubs with which this Association has a cooperation with, were　obviously less in 2002 indicates that the overall conditions of the fleets entered into this Association have taking a turn for the better.

　　In conclusion, the Managers still need to remind all Members to pay special attention to the seaworthiness of their vessels ntered and make due arrangements to have their vessels repaired and amended within time limit specified by the surveyors so as to ensure that the cover for these vessels shall not be affected should any defects or inadequacy or any items which cause any restriction clauses be discovered during the surveys inspections or examinations.

2. BUSINESS SEMINARS
　　A seminar was held in Jinan in September of 2002 by the Association. Lectures given respectively by the officers of the anagers, the supreme people's Court, Qingdao Maritime Court, Marine Transport Dept of the Ministry of Communication of P.R.C., embers and lawyers on the subject of maritime proceedings evidence and its several problems in relation to shipowners in judicial practice. "The Regulations on Domestic Transport by Water", " The Regulation on Cargo Handing in Ports", "CLC", Laws on　Arrest Ships of South Africa, the effect of the "Sept.11th Event" on the cover of war risks and the countermeasures of the shipowners, some legal problems in issuing Bills of Lading, the problems on service of providing guarantee by the Association and issues on various kinds of undertaking, etc. The seminar enabled Members to know the latest legislation of both domestic and　international maritime codes and other current practical problems in maritime business. The Managers compiled a special booklet containing the papers delivered in the seminar for Members' reference.

　　Furthermore, the Shanghai office of the Association was invited to introduce the experiences in handling and settling of cases by the Managers in a seminar held by a Member company.

3. ADVISORY SERVICES

　　The Managers published 12 issues of Advisory Services with 36 articles, the contents of which include loss prevention, aritime laws and regulations etc. The article on the Special Compensation P&I Clubs clause (Scopic) introduces the clause often corporated by the international clubs in dealing with potential oil pollution. The article of "Introduction and Understanding of the Laws of South Africa on Arresting Ships " and the article of "Cases on Implementing Ship's Arrest" introduced the unique Laws on arresting ships in South Africa and recommended the countermeasures of the shipowners. The articles on international egislations on maritime codes, e.g. the article on " The Review on CLC" etc, introduced general principles of the international convention and the trends of the future international legislations. The articles such as "An Urgent Notice Regarding arrying　Timbers Exported from Indonesia" and "Emergency Temporary Quarantine Measures on Wooden Packages Exported from EU Countries to China" timely give out circular notices concerning the emergency measures taken by the relevant states in respect of shipping and its related industries.

4.OIL POLLUTION CERTIFICATES
　　The Managers arranged for 46 vessels of 20 Members in 2002 to obtain the COFR Certificates for the vessels trading to U.S. territorial water. The arrangements made increased by 11%(in Members) and 21% (in vessels) respectively as compared with last year. In addition, the Managers issued to 62 tankers of 15 Members the application forms (Blue Cards) for the civil liability oil pollution certificate. The issues increased by-25%(in Members) and 19% (in vessels) respectively as compared with last year.

Member Vessel Member Vessel Member Vessel