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5 White Paper on the Business Environment in China
2.3 Machinery and Electrical Equipment
XINHUA REPORTS THAT between 2001 and Hi-Tech Industry noted that “the proportion of high-tech
2010, the total output value of the machinery industry products in the country’s exports of machinery and electronic
increased from 1.44 trillion to 14.38 trillion yuan, a sustained products remains small,” and that “[ e PRC] still relies on
growth rate of 25 percent. In the same period, the number imports of much high-end equipment.”7
of enterprises in the industry grew from 34,000 holding 2
trillion yuan in assets to 107,000 holding 10 trillion in assets is perceived de ciency resulted in “huge incentives for
in 2010.1 innovation and R&D” and the encouragement that “as the
country expands infrastructure construction, machinery rms
According to the National Bureau of Statistics of should take the opportunity to upgrade their technology
China’s China Statistical Yearbook 2009, the manufacture and raise their competitiveness.” It was also mentioned
of machinery and electrical equipment* by state-owned that the government would be actively integrating research
enterprises in 2008 resulted in an aggregate 14.8 trillion yuan organizations into the industrial product development cycle
in revenue from principal business activities across 120,106 and adjusting tax policy to “encourage machinery exports and
enterprises above a designated size,** including state-owned, imports of key technologies and machinery parts.”8
privately-held domestic and foreign-invested rms.2
Following up on these changes, Chairman of the National
e 59,244 Foreign-invested*** enterprises included in Committee of the Chinese People’s Political Consultative
the data alone accounted for 4 trillion of the sectors’ total Conference Jia Qinglin remarked that the machinery industry
revenue while employing 7.1 million of the total labor force ought to “raise the quality and e ciency of the industry,
of 26.0 million individuals (approximately 27 percent of the accelerate mergers and acquisitions to forge conglomerates,
total).2 and enhance the industry’s ability to withstand risks.”9
In early 2008, the Vice Director of the China Machinery Over the course of 2012 the Machinery business in
Industry Federation (CMIF) described the strong growth of China—both in terms of production as well as consumption—
the machinery industry, saying that, “[We have] upgraded saw further (relative) hardship as, according to analyst Zhang
our products and strengthened the overall manufacturing Cheng with Changjiang Securities in Shanghai, “ e Chinese
industry,”3 and o ering energy-saving and pollution reduction machinery sector [was] experiencing a bottoming-out
equipment, infrastructure equipment and digitally-controlled period.”10
machine tools as examples of areas in which the domestic
sector has made great technological progress. at year, for example, “Japanese excavator maker
Komatsu […] saw demand in China for construction and
By the end of that year, the PRC’s export volume of mining equipment falling 40 per cent [over] three months,”
machinery and electrical equipment was the second-largest while “[Komatsu’s] Chinese rival Sany Heavy Industry […]
in the world; a year later it was the largest.4 Foreign-invested reported a near-60 per cent slump in third quarter pro ts.”10
rms’ exports accounted for 69.4 percent of that year’s total Similarly, by October of that year Caterpillar had “slashed
(which exports were worth approximately $494 billion). 5 its 2012 forecast” twice due to sales in China that had “slowed
in the third quarter and had yet to improve.”10
While the machinery sector continued to grow, 2011 saw
expectations of a foreign trade de cit in the eld attributed to Hitachi Executive Vice President Toyoaki Nakamura
the rapid growth of machinery imports according to CMIF echoed seemingly worldwide pessimism about the near-term
as including rising input costs, di culties in nancing and market for machinery in China, opining that “we are starting
increased labor costs. Nevertheless, total sales were predicted to see quite a (negative) impact from China, quite suddenly
to expand by more than 10 percent.6 on our earnings, especially on construction machinery and
high functional materials, areas where the immediate market
e same year, Chief Director Zhang Ji of the Ministry conditions are quickly re ected on results.”10
of Commerce’s Department of Mechanical, Electronic and
* e “China Statistical Yearbook” includes six industrial sectors which we group under the title “machinery and electrical equipment”: “Manufacture of Gen-
eral Purpose Machinery”, “Manufacture of Special Purpose Machinery”, “Manufacture of Transport Equipment”, “Manufacture of Electrical Machinery and
Equipment”, “Manufacture of Communication Equipment, Computers and Other Electronic Equipment” and “Manufacture of Measuring Instruments
and Machinery for Cultural Activity and O ce Work.” Figures from the “China Statistical Yearbook” quoted hereafter are aggregates of values from those six
categories in the original publication.
**Here, “above a designated size” is quali ed as enterprises with annual revenue from principal business of greater than 5 million yuan.
*** is category includes enterprises funded from Hong Kong, Macau and Taiwan.
134
2.3 Machinery and Electrical Equipment
XINHUA REPORTS THAT between 2001 and Hi-Tech Industry noted that “the proportion of high-tech
2010, the total output value of the machinery industry products in the country’s exports of machinery and electronic
increased from 1.44 trillion to 14.38 trillion yuan, a sustained products remains small,” and that “[ e PRC] still relies on
growth rate of 25 percent. In the same period, the number imports of much high-end equipment.”7
of enterprises in the industry grew from 34,000 holding 2
trillion yuan in assets to 107,000 holding 10 trillion in assets is perceived de ciency resulted in “huge incentives for
in 2010.1 innovation and R&D” and the encouragement that “as the
country expands infrastructure construction, machinery rms
According to the National Bureau of Statistics of should take the opportunity to upgrade their technology
China’s China Statistical Yearbook 2009, the manufacture and raise their competitiveness.” It was also mentioned
of machinery and electrical equipment* by state-owned that the government would be actively integrating research
enterprises in 2008 resulted in an aggregate 14.8 trillion yuan organizations into the industrial product development cycle
in revenue from principal business activities across 120,106 and adjusting tax policy to “encourage machinery exports and
enterprises above a designated size,** including state-owned, imports of key technologies and machinery parts.”8
privately-held domestic and foreign-invested rms.2
Following up on these changes, Chairman of the National
e 59,244 Foreign-invested*** enterprises included in Committee of the Chinese People’s Political Consultative
the data alone accounted for 4 trillion of the sectors’ total Conference Jia Qinglin remarked that the machinery industry
revenue while employing 7.1 million of the total labor force ought to “raise the quality and e ciency of the industry,
of 26.0 million individuals (approximately 27 percent of the accelerate mergers and acquisitions to forge conglomerates,
total).2 and enhance the industry’s ability to withstand risks.”9
In early 2008, the Vice Director of the China Machinery Over the course of 2012 the Machinery business in
Industry Federation (CMIF) described the strong growth of China—both in terms of production as well as consumption—
the machinery industry, saying that, “[We have] upgraded saw further (relative) hardship as, according to analyst Zhang
our products and strengthened the overall manufacturing Cheng with Changjiang Securities in Shanghai, “ e Chinese
industry,”3 and o ering energy-saving and pollution reduction machinery sector [was] experiencing a bottoming-out
equipment, infrastructure equipment and digitally-controlled period.”10
machine tools as examples of areas in which the domestic
sector has made great technological progress. at year, for example, “Japanese excavator maker
Komatsu […] saw demand in China for construction and
By the end of that year, the PRC’s export volume of mining equipment falling 40 per cent [over] three months,”
machinery and electrical equipment was the second-largest while “[Komatsu’s] Chinese rival Sany Heavy Industry […]
in the world; a year later it was the largest.4 Foreign-invested reported a near-60 per cent slump in third quarter pro ts.”10
rms’ exports accounted for 69.4 percent of that year’s total Similarly, by October of that year Caterpillar had “slashed
(which exports were worth approximately $494 billion). 5 its 2012 forecast” twice due to sales in China that had “slowed
in the third quarter and had yet to improve.”10
While the machinery sector continued to grow, 2011 saw
expectations of a foreign trade de cit in the eld attributed to Hitachi Executive Vice President Toyoaki Nakamura
the rapid growth of machinery imports according to CMIF echoed seemingly worldwide pessimism about the near-term
as including rising input costs, di culties in nancing and market for machinery in China, opining that “we are starting
increased labor costs. Nevertheless, total sales were predicted to see quite a (negative) impact from China, quite suddenly
to expand by more than 10 percent.6 on our earnings, especially on construction machinery and
high functional materials, areas where the immediate market
e same year, Chief Director Zhang Ji of the Ministry conditions are quickly re ected on results.”10
of Commerce’s Department of Mechanical, Electronic and
* e “China Statistical Yearbook” includes six industrial sectors which we group under the title “machinery and electrical equipment”: “Manufacture of Gen-
eral Purpose Machinery”, “Manufacture of Special Purpose Machinery”, “Manufacture of Transport Equipment”, “Manufacture of Electrical Machinery and
Equipment”, “Manufacture of Communication Equipment, Computers and Other Electronic Equipment” and “Manufacture of Measuring Instruments
and Machinery for Cultural Activity and O ce Work.” Figures from the “China Statistical Yearbook” quoted hereafter are aggregates of values from those six
categories in the original publication.
**Here, “above a designated size” is quali ed as enterprises with annual revenue from principal business of greater than 5 million yuan.
*** is category includes enterprises funded from Hong Kong, Macau and Taiwan.
134
