The machinery industry experienced rapid growth in the first half of the year, but remains cautiously optimistic for the full year.

From January to May of this year, major economic indicators for mechanical industry enterprises across the country showed a strong growth trend. Experts noted that while the overall performance for the year should be viewed with cautious optimism, the outlook for the second half of the year won't become clearer until around September of this year.


Total output growth rate: 38.93%

1. In May, the mechanical industry as a whole continued its recovery trend in terms of production and sales growth, growth rate of new product output value, profitability, and the scale of import and export trade. In May, the total output value of the mechanical industry reached 5,285.1 billion yuan, an increase of 38.93% year-on-year; the completed sales output value totaled 5,160.4 billion yuan, up 39.83% over the same period last year. The growth rate of new product output value in the mechanical industry outpaced the growth rates of production and sales: in May, the entire industry achieved a new product output value of 1,014.146 billion yuan, representing a year-on-year increase of 46.24%, with six sub-sectors recording growth rates exceeding 50%. Profits surged significantly year-on-year: in May, the mechanical industry realized total profits of 353.642 billion yuan, up 86.13% over the same period last year—a substantial increase compared to the 7.73% growth rate in the previous year—and an additional 163.648 billion yuan compared to the same period last year. Profit growth outpaced the growth in production and sales.

The scale of import and export trade continues to expand, and the export environment has slightly improved. From January to May, the machinery industry’s cumulative import and export volume reached nearly 200 billion U.S. dollars, representing a year-on-year increase of 39.45%. Among this, exports totaled 85.643 billion U.S. dollars, up 29.7% year-on-year, while imports amounted to 94.953 billion U.S. dollars, up 50.88% year-on-year. Both import and export growth rates have been rebounding month by month; meanwhile, import growth outpaced export growth by 21.18 percentage points.

Experts attribute this to three main factors: First, due to the impact of the financial crisis, the economic indicators for the machinery industry in the same period last year were all at a low base; second, the support provided by a series of national policies, including the “Plan for Adjusting and Revitalizing the Equipment Manufacturing Industry”; and third, the gradual commencement of several engineering projects since the beginning of this year.


Nine sub-sectors saw growth rates exceeding 30%.

Looking at the performance of the 13 sub-sectors within the machinery industry, most sectors showed strong growth, with 9 sectors posting growth rates exceeding 30%. The automotive sector experienced the largest rebound, with production and sales growth rates increasing by 51.15 and 52.06 percentage points, respectively, compared to the same period last year. Additionally, five other sectors—internal combustion engines, construction machinery, cultural and office equipment, machine tools, and other civilian machinery—each saw growth rates increase by more than 30 percentage points.

The automotive industry has maintained a rapid growth trend since the beginning of this year, and annual vehicle production is expected to reach between 15 million and 16 million units. According to expert analysis, given China’s current car ownership rate—approximately one vehicle per thousand people—the automotive sector still boasts strong domestic demand-driven growth potential. However, at present, external demand is insufficient, resulting in a trade deficit for the automotive industry.
Although output value and production volume increased in most sub-sectors, the output of certain machinery products declined—for example, agricultural machinery, metallurgical rolling mills, hydropower equipment, and power transmission and transformation equipment. In the heavy mining industry, the growth rate of total output from January to May was the lowest among the 13 machinery sub-sectors, at 22.16%.


We need to remain calm about the situation for the entire year.

The growth rate of investment has slowed down. From January to May, the machinery industry’s cumulative fixed-asset investment reached 547.911 billion yuan, representing a year-on-year increase of 26.35%. Meanwhile, the growth rate of investment projects has also decelerated: from January to May, the machinery industry had 20,558 fixed-asset investment projects under construction, an increase of 1,533 compared to the same period last year, up 8.06% year-on-year—but this growth rate was 3.1 percentage points lower than that recorded from January to April. Relevant experts pointed out that, as a leading indicator of fixed-asset investment, changes in the number of investment projects will determine future investment growth. The current slowdown in fixed-asset investment compared to previous years deserves close attention.

Monthly declines in output value, profits, and orders. According to statistics from key enterprises monitored by the China Machine Tool Industry Association, cumulative orders for the first quarter totaled 22.1 billion yuan, while orders on hand as of May reached 26.7 billion yuan. However, monthly orders in May showed a significant drop compared to previous months. The General Basic Components Industry Association reported that since April, orders for companies in the industry have begun to decline. Similarly, both output value and profits have shown a month-on-month downward trend.

The product structure is shifting downward. According to available information, the CNC rate for machine tools this year stands at 49%, compared to 62% during the same period last year. From January to May, the average export unit price of CNC machine tools was $22,000, down from $28,000 in the same period last year. Industry insiders point out that this decline is not due to lower prices for machine tools themselves, but rather reflects changes in market demand. Recently, domestically, there has been a supply shortage of ordinary and mid-range machine tools, and exports are facing a similar situation. This is a temporary phenomenon in the short term; viewed from the broader trend, the direction of structural adjustment and industrial upgrading remains unchanged.

Regarding the rapid growth trend in the machinery industry so far this year, while experts express their satisfaction, they also point out that this growth is largely recovery-driven. At the same time, experts generally believe that we should not focus solely on the growth of production and sales value, but rather pay closer attention to indicators such as product sales rates and core business profit margins, and remain calm throughout the year. Currently, several issues still carry uncertainties, including changes in demand amid economic structural adjustments, the sovereign debt crisis in Europe in the international market, and the reform of the RMB exchange rate. Experts predict that the scenario of substantial growth seen in the machinery industry throughout the year will not repeat itself, and the industry is likely to experience a narrow range of fluctuations instead. Experts advise avoiding, as much as possible, signing contracts in euros and exercising caution when expanding production capacity. (Source: Machinery Industry News)