The New York skyline is seen in a distance as Royal Caribbean's Explorer of the Seas enters New York harbour Jan 29, 2014. [Photo/Agencies]

SHANGHAI - A Chinese company is planning to build China's first cruise ship, tapping booming tourist demand in the country.

Shanghai Waigaoqiao Shipbuilding Co Ltd said on Wednesday that it will build the ship with technical support from Italian shipbuilder Fincantieri, with construction starting in 2017 and hopefully completing in 2020.

Parent firm China State Shipbuilding Corporation along with the China Investment Corporation will set up a joint venture with 2.6 billion pounds with America's Carnival Cruise Lines to purchase the vessel.

As China gets into building cruise liners, it will focus on making luxury ships weighing more than 100,000 tons, said Chen Jun, vice manager of Shanghai Waigaoqiao.

The design of the new ship will incorporate traditional Chinese elements, with the total cost running to $1 billion, Chen said.

By the time the liner is delivered in 2020, it is expected that 4.5 million Chinese will be taking cruise vacations and that the number will grow nearly four-fold over the following decade.

China will then become one of the world's largest markets for cruise travel and need five new cruise ships a year to meet demand.

The world currently needs 13 new cruise ships each year. Seven of them will replace older ships while the other six are for meeting increased demand for cruise travel, according to Chen.

"The world needs more shipbuilders as existing ones cannot take orders for cruise liners beyond those slated for delivery in 2022," he added.