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Chinas Machinery Industry Recovery To Gather Pace In H2

Release time : 2015-06-15 12:44:03
The annual output value of China???s machinery industry looks set to increase by 12 percent in 2009, with profits up to about 8 percent and foreign exchange earnings from exports down 10 percent from the previous year, forecast by Cai Weici, executive vice president of the China Machinery Industry Federation. This year, in the wake of supportive government policies, the machinery industry recovered from a low in second quarter, halting the first quarter downward trend lasted that began in late 2008. Recovery is expected to speed up in the second half, realizing double-digit growth in the fourth quarter. Cai observed that several factors could be attributed to the expected improved overall environment in the second half of this year: First, the demand for machinery products by various industrial sectors is expected to grow further, as the macroeconomic recovery continued encouraged by the national fiscal policy and relaxed monetary policy. Secondly, increased supplies of energy and raw materials should help lower costs. Thirdly, the national government polices to restructure and revitalize the equipment manufacturing industry and automobile industry should accelerate the pace of the industry development. Finally, the sluggish performance of the machinery industry in the second half, in particular the fourth quarter last year, presented a low benchmark that should flatter the growth rate figure for the second half. Hit by one of the worst world financial crises in history in the second half of 2008, the main economic indicators for China???s machinery industry plunged, in particularly in the fourth quarter, when the crisis was at its worst. Reaching its low point in January this year, the machinery industry has recovered month by month. A number of factors have come into play, which may affect the industry???s growth: ? The productivity of the machinery industry has staged a recovery. The output value of the industry in the first half increased 7.28 percent year-on-year, with June seeing 11.65-percent growth in a single month. Moreover, the growth rate has rebounded 1 percentage point on average in nearly four months. ? Positive government intervention has allowed the sector to update and upgrade their products. Products of agricultural machinery and automobile industry benefited most, followed by power, metallurgical and mining equipment. ? World economy and China???s domestic economy as well have gradually turned in the industry???s favor, including changes to the tax regime, improved business income, and the demand for finished goods slowing at a declining rate. ? Despite the beginnings of recovery in the machinery industry, it will take a while for the sector to show a marked improvement. The industry is till facing a weak external demand. The downward trend in exports is still continuing, which will influence the overall recovery of the industry. In the first half of this year, exports decreased 24.11 percent to $89.146 billion. An annualized figure shows export value decreased 23.62 percent compared with a 12.07-percent increase in domestic sales. Over-investment in fixed assets is increasing the risk of oversupply. As a result, overcapacity, cutthroat competition, and vicious price wars are problems facing the industry that call for optimizing the investment structure and an even greater commitment to a positive development policy.