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Chinese machinery production sees slowest rate since 2012

Posted: 06 Mar 2015 ?? ?Print Version ?Bookmark and Share

Keywords:machinery production? machinery problems? metalworking? textile machinery? industrial robotics?

China's machinery production is forecast to see its slowest rate this year as the country still experiences overcapacity and weak demand in construction, metalworking, mining, paper and paperboard as well as textile machineries. However, fastest growth is seen on semiconductor machinery and industrial robotics, owing to strong demand from consumer electronics, especially Apple products.

IHS Inc., who forecast an expansion of 6.9 per cent in Chinese machinery production this year, believes that more time is needed to solve the country's machinery problems, which are related to investment and export markets. The forecast rate is the country's slowest since 2012 and is expected to continue in the coming quarters, according to the "Chinese Machinery Production Quarterly Tracker" report from IHS Inc.

Financial service institution HSBC and NBS both announced the country's lowest manufacturing purchasing manager index December 2014.

Machinery production revenue and revenue growth
Chinese machinery production revenue and revenue growth. Source: IHS

"China over the past several years has had among the highest growth rates in the world," said Jay Tang, analyst for Asia-Pacific industrial automation at IHS. "With the latest machinery production numbers showing a major deceleration, everyone now must accept that the Chinese economy is shifting to slower growth." Excess in housing market, industrial capacity, and lending have weighed down the country's economy.

However, China experienced growth in some industries serving domestic consumption. Among these were agricultural machinery, elevators and escalators, electronics and electronics assembly, oil and gas, medical and scientific, food, beverage and tobacco machinery, and packaging machinery. Growth was also seen in the wind turbine industry, which was influenced by grid-connected power from wind turbines and photovoltaic manufacturing.

In the face of the decelerating machinery industry, China still remains the largest e-commerce market in the world. In addition, its "One Belt and One Road" project, a strategy for promoting trade and communications, is expected to help resolve overcapacity problems. The Chinese government has also approved a package of investment plans for infrastructure worth $1.6 trillion.

The new norm for Chinese machinery production envisions moderate growth in the future but continuous structural adjustment. IHS believes that machine builders need to find ways to upgrade their products and capabilities.

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