Page 196 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
2.4 Machinery Industry
Background percent to US$306.3 billion, according to data released
by Beijing-based China Machinery Industry Federation.
The US has lost about a fifth of its global share of All its 13 main sub-sectors gained encouraging year-
manufacturing since 1997, thanks to China, on-year growth in foreign trade business, with double-
but other rich countries, even Germany, have seen their digit growth in exports of agricultural and construction
global shares shrink by more. That’s an indication that machinery, machine tools and automobiles last year.
US manufacturing has held up about as well as can be Among them, harvesting and field operation machinery,
expected in the face of the Chinese onslaught. Thanks to bulldozers, loaders, numerical control machines and
China’s then extremely low costs for labor, capital, land vehicles, saw their export volume jumping by 51.5 percent
and energy, its undervalued exchange rate, and the lure 70.4 percent, 48.6 percent, 44.1 percent and 31.2 percent
of China’s vast domestic market, production shifted to the year-on-year respectively. After more than two years
country en masse in the 2000s (Tatom and Kliesen). Now of decline, the rebound in the world’s transportation,
that Chinese costs have increased — and no other China- manufacturing, oil and construction sectors eventually
like country is prepared to emerge to cause a repeat of created more growth momentum for domestic players
the 2000s — the US may once again one day be a world- to ship their products abroad in 2017, as the machinery
manufacturing hub. The irony would be that if the US industry mainly serves those sectors. The federation said
is ever going to become a manufacturing powerhouse profits of China’s machinery manufacturers amounted
again, it will need to acquire specific skill sets and a whole to 1.71 trillion yuan (US$272.21 billion) in 2017, up 10.74
lot of robots that are now made in China. percent year-on-year, while their main business revenue
came in at 24.54 trillion yuan, rising 9.47 percent from
China faces the threat of US tariff hikes in a dispute 2016 (ECN).
over trade and technology but economic indicators were
already turning down after Beijing tightened lending Market Trends
controls to rein in a rise in debt. Exports have shrunk
as a share of China’s economy and contribute less than China has also experienced a consistent year-over-year
1 percent of annual growth but still support millions of deceleration due to an exodus of manufacturers following
manufacturing jobs. A survey conducted by the National wage increases of roughly 80 percent since 2010. The fact
Statistics Bureau (NBS) and the China Federation of is that much of China’s manufacturing is not as important
Logistics & Purchasing showed indicators of exports, new as it once was for a variety of reasons. However, even as
orders and manufacturing all weakened in June 2018. the death knell tolls for low-end manufacturing, this is
The International Monetary Fund (IMF) forecasted that ultimately a positive sign for China’s economic forecast
2018’s Chinese economic growth would decline from because it signals that China’s economy is no longer in
2017’s 6.9 percent to a still-robust 6.6 percent. Longer- its infancy. Gross domestic product (GDP) has improved
term, the IMF expects growth to decline to 5.5 percent by despite manufacturing weakness.
2023 (Associated Press, China’s Manufacturing).
The federation said profits of China’s machinery
Machinery manufacturers from China are expected to manufacturers amounted to 1.71 trillion yuan (US$272.21
maintain a 7 percent year-on-year growth in exports in billion) in 2017, up 10.74 percent year-on-year, while their
2018 on the back of the Belt and Road Initiative, rebound main business revenue came in at 24.54 trillion yuan,
of global infrastructure, manufacturing and energy rising 9.47 percent from 2016 (Machinery Exports). The
markets. Total exports by the country’s machinery sector manufacturing industry is still a large and prominent part
stood at US$406 billion in 2017, up 8.33 percent from of the Chinese economy, and manufacturing for exports
2016, while imports during the same year jumped 12.31 continues to contribute heavily. Traditionally, Chinese
196
2.4 Machinery Industry
Background percent to US$306.3 billion, according to data released
by Beijing-based China Machinery Industry Federation.
The US has lost about a fifth of its global share of All its 13 main sub-sectors gained encouraging year-
manufacturing since 1997, thanks to China, on-year growth in foreign trade business, with double-
but other rich countries, even Germany, have seen their digit growth in exports of agricultural and construction
global shares shrink by more. That’s an indication that machinery, machine tools and automobiles last year.
US manufacturing has held up about as well as can be Among them, harvesting and field operation machinery,
expected in the face of the Chinese onslaught. Thanks to bulldozers, loaders, numerical control machines and
China’s then extremely low costs for labor, capital, land vehicles, saw their export volume jumping by 51.5 percent
and energy, its undervalued exchange rate, and the lure 70.4 percent, 48.6 percent, 44.1 percent and 31.2 percent
of China’s vast domestic market, production shifted to the year-on-year respectively. After more than two years
country en masse in the 2000s (Tatom and Kliesen). Now of decline, the rebound in the world’s transportation,
that Chinese costs have increased — and no other China- manufacturing, oil and construction sectors eventually
like country is prepared to emerge to cause a repeat of created more growth momentum for domestic players
the 2000s — the US may once again one day be a world- to ship their products abroad in 2017, as the machinery
manufacturing hub. The irony would be that if the US industry mainly serves those sectors. The federation said
is ever going to become a manufacturing powerhouse profits of China’s machinery manufacturers amounted
again, it will need to acquire specific skill sets and a whole to 1.71 trillion yuan (US$272.21 billion) in 2017, up 10.74
lot of robots that are now made in China. percent year-on-year, while their main business revenue
came in at 24.54 trillion yuan, rising 9.47 percent from
China faces the threat of US tariff hikes in a dispute 2016 (ECN).
over trade and technology but economic indicators were
already turning down after Beijing tightened lending Market Trends
controls to rein in a rise in debt. Exports have shrunk
as a share of China’s economy and contribute less than China has also experienced a consistent year-over-year
1 percent of annual growth but still support millions of deceleration due to an exodus of manufacturers following
manufacturing jobs. A survey conducted by the National wage increases of roughly 80 percent since 2010. The fact
Statistics Bureau (NBS) and the China Federation of is that much of China’s manufacturing is not as important
Logistics & Purchasing showed indicators of exports, new as it once was for a variety of reasons. However, even as
orders and manufacturing all weakened in June 2018. the death knell tolls for low-end manufacturing, this is
The International Monetary Fund (IMF) forecasted that ultimately a positive sign for China’s economic forecast
2018’s Chinese economic growth would decline from because it signals that China’s economy is no longer in
2017’s 6.9 percent to a still-robust 6.6 percent. Longer- its infancy. Gross domestic product (GDP) has improved
term, the IMF expects growth to decline to 5.5 percent by despite manufacturing weakness.
2023 (Associated Press, China’s Manufacturing).
The federation said profits of China’s machinery
Machinery manufacturers from China are expected to manufacturers amounted to 1.71 trillion yuan (US$272.21
maintain a 7 percent year-on-year growth in exports in billion) in 2017, up 10.74 percent year-on-year, while their
2018 on the back of the Belt and Road Initiative, rebound main business revenue came in at 24.54 trillion yuan,
of global infrastructure, manufacturing and energy rising 9.47 percent from 2016 (Machinery Exports). The
markets. Total exports by the country’s machinery sector manufacturing industry is still a large and prominent part
stood at US$406 billion in 2017, up 8.33 percent from of the Chinese economy, and manufacturing for exports
2016, while imports during the same year jumped 12.31 continues to contribute heavily. Traditionally, Chinese
196
