China has been implementing shipbuilding as a strategic industry at the beginning of the People's Republic of China to establish itself as a major maritime power. Unlike most other sectors, its infrastructure could not be physically relocated far inland as part of Mao’s disastrously “Third Front Movement”. When Deng began reforms at the end of the 1970s, he prioritized shipbuilding to support the shipping industry, which helped carry foreign trade, underwriting several decades of rapid growth of China, As a result, the global market share of China's shipbuilding industry increased significantly from 2000s by using abundant cheap labor and domestic demand and China overtook Korea as the world's top shipbuilder in the first half of 2010. However, China's shipbuilding industry experienced significant slowdown in production completion, cancellation of existing orders, and huge drop in new orders since the international financial crisis of 2008. Since 2013, the Government issued several Action Plans to accelerate structural adjustment and the transformation and upgrade the shipbuilding industry and they had removed seriously excessive capacity successfully so far. But the current capacity is still too excessive, and China’s shipbuilding industry needs to ‘slim down’ further by removing another capacity. This paper looks into the development process of the China's shipbuilding industry and try to find out a few suggestions for future development of industry