Page 178 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
2.4 Machinery Industry
Key Take-Aways from villages and small towns during the January-
June 2019 period, the revenue from e-commerce
Sales and registrations of new vehicles channels in these areas increased by 96 percent
in regions including Beijing, year-on-year.
Shanghai, Tianjin, Hebei Province and Guangdong
Province now have to comply with what is believed Background
to be one of the world’s strictest rules on automobile
pollutants. China’s mechanical industry will maintain an
overall stable growth. The industry saw a 6.5
Manufacturers of construction machinery and percent growth of added value in 2019, and a
building materials are expected to see steady 5 percent growth of total profit. The industry’s
growth in 2020, as China continues to ramp up growth is being spurred by a 2019 guideline, issued
fixed asset investment. With China’s endeavors by 10 national authorities including the Ministry
to pursue stable growth, advance reform, make of Commerce and the Ministry of Industry and
structural adjustments, improve people’s living Information Technology, on optimizing supply and
standards and guard against risks, the construction promoting consumption. The industry is expected
machinery sector revenue grew by more than 10 to accelerate innovation-driven development and
percent in 2019. seek new dynamics in 2019 to advance high-quality
growth and industrial upgrading. In 2018, the
With the modernization of agriculture, the industry’s revenue amounted to 21.38 trillion yuan
demand for advanced farming devices has been ($3.19 trillion), up 6.05 percent from the previous
growing significantly. Industry statistics forecast year, while total profits stood at 1.45 trillion yuan,
the penetration rate of agricultural drones in China up 2.18 percent year-on-year (Xinhua, Mechanical
will reach more than 40 percent in 2023, with sales Industry). Still, major Chinese machinery equipment
reaching 16 billion yuan. The government has also makers said their net income in the first six months
issued policies to promote the use of modern of 2019 may have doubled compared to the same
agricultural machinery, such as offering subsidies period the previous year, taking advantage of
to encourage the use of drones in agriculture. strong infrastructure demand and the companies’
enhanced capabilities. The construction machinery
The People’s Bank of China has encouraged manufacturing industry is a highly cyclical business.
domestic financial institutions to beef up their In China, the industry was confronted with a
support for industrial robot manufacturing by recession between 2012 and 2016 because of a glut.
providing innovative financing, lease and pledge After expanding over the past two years, growth in
services. Efforts should be made to target corporate the industry began slowing down in 2018. Zhang
needs, facilitate research and development of Cheng, an analyst with Huatai Securities, said the
core technologies and boost industrial chain growth rate of companies related to infrastructure
reconstruction and its application in broader areas and real estate investment will be higher than
in the regional industrial agglomeration. others. Global uncertainties will continue to have an
impact on the industry and lead to an industrywide
Chinese home appliance makers and online shakeout. Companies that are globally competitive
retailers are accelerating efforts to further tap the are expected to post better than expected results,
consumption potential from rural areas. Although Zhang said (Jing, Momentum).
less than 20 percent of online retail sales came
178
2.4 Machinery Industry
Key Take-Aways from villages and small towns during the January-
June 2019 period, the revenue from e-commerce
Sales and registrations of new vehicles channels in these areas increased by 96 percent
in regions including Beijing, year-on-year.
Shanghai, Tianjin, Hebei Province and Guangdong
Province now have to comply with what is believed Background
to be one of the world’s strictest rules on automobile
pollutants. China’s mechanical industry will maintain an
overall stable growth. The industry saw a 6.5
Manufacturers of construction machinery and percent growth of added value in 2019, and a
building materials are expected to see steady 5 percent growth of total profit. The industry’s
growth in 2020, as China continues to ramp up growth is being spurred by a 2019 guideline, issued
fixed asset investment. With China’s endeavors by 10 national authorities including the Ministry
to pursue stable growth, advance reform, make of Commerce and the Ministry of Industry and
structural adjustments, improve people’s living Information Technology, on optimizing supply and
standards and guard against risks, the construction promoting consumption. The industry is expected
machinery sector revenue grew by more than 10 to accelerate innovation-driven development and
percent in 2019. seek new dynamics in 2019 to advance high-quality
growth and industrial upgrading. In 2018, the
With the modernization of agriculture, the industry’s revenue amounted to 21.38 trillion yuan
demand for advanced farming devices has been ($3.19 trillion), up 6.05 percent from the previous
growing significantly. Industry statistics forecast year, while total profits stood at 1.45 trillion yuan,
the penetration rate of agricultural drones in China up 2.18 percent year-on-year (Xinhua, Mechanical
will reach more than 40 percent in 2023, with sales Industry). Still, major Chinese machinery equipment
reaching 16 billion yuan. The government has also makers said their net income in the first six months
issued policies to promote the use of modern of 2019 may have doubled compared to the same
agricultural machinery, such as offering subsidies period the previous year, taking advantage of
to encourage the use of drones in agriculture. strong infrastructure demand and the companies’
enhanced capabilities. The construction machinery
The People’s Bank of China has encouraged manufacturing industry is a highly cyclical business.
domestic financial institutions to beef up their In China, the industry was confronted with a
support for industrial robot manufacturing by recession between 2012 and 2016 because of a glut.
providing innovative financing, lease and pledge After expanding over the past two years, growth in
services. Efforts should be made to target corporate the industry began slowing down in 2018. Zhang
needs, facilitate research and development of Cheng, an analyst with Huatai Securities, said the
core technologies and boost industrial chain growth rate of companies related to infrastructure
reconstruction and its application in broader areas and real estate investment will be higher than
in the regional industrial agglomeration. others. Global uncertainties will continue to have an
impact on the industry and lead to an industrywide
Chinese home appliance makers and online shakeout. Companies that are globally competitive
retailers are accelerating efforts to further tap the are expected to post better than expected results,
consumption potential from rural areas. Although Zhang said (Jing, Momentum).
less than 20 percent of online retail sales came
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