China's machinery industry notched up 32.23 percent growth in
the first half of the year, fuelled by the nation's strong economic
growth, said top officials from the China Machinery Industry
Federation (CMIF).
"The growth of the sector is expected to slow down in the second
half due to the central government's tightening measures, with the
annual growth of the sector standing at about 20 percent," said
CMIF Vice-President Cai Weici. The CMIF is a quasi-governmental
institution that oversees the growth of China's machinery
sector.
China's economic growth surged to 10.9 percent in the first six
months, driven by fixed-assets investment that rose 29.8 percent in
the same period.
The machinery industry, which supplies machines for other
industrial sectors, has benefited from the investment spree as
demand for construction machines and power-generation equipment
increased during the period.
The machinery industry's total output reached 670.07 billion
yuan (US$83.76 billion) in the first half of 2006, up 32.23 percent
year-on-year, according to statistics from the CMIF.
The construction equipment and mining equipment manufacturing
sectors have been the bellwether of the 13 sectors CMIF oversees,
with growth rates of more than 40 percent year-on-year.
Meanwhile, the machinery industry reaped 127.61 billion yuan
(US$15.95 billion) in profits during the first half of 2006, a
year-on-year rise of 43.92 percent.
In terms of machinery, China's foreign trade deficit shrunk to
US$1 billion in the first half of the year, about one-sixth of the
same period last year, CMIF said.
The sectors' exports rose 36.15 percent, compared with a 21.6
percent rise in imports.
"The product structure of the machinery industry was further
optimized during the first half of the year, as domestic
enterprises continue to upgrade their technological level and
adjust their product portfolios," said Cai.
For example, 103 million smaller-engine cars were sold in the
first half of 2006, up 87.28 percent year-on-year.
The central government has recently been promoting the use of
more fuel-efficient cars, and required local governments to scrap
restrictions on their use in built-up areas.
However, analysts caution that the huge investment poured into
the sector, coupled with the central government's tightening
measures, may lead to overcapacity and result in a downturn.
Fixed-assets investment in the machinery industry skyrocketed by
52.89 percent in the first half of the year, compared with an
increase of 29.8 percent in overall fixed-assets investment during
the same period.
"The central government's move to cool the economy, especially
the sectors already showing signs of overheating, will trigger a
gradual slowdown in the machinery industry," said Cai.
The government has taken measures to slow down some overheated
sectors. The central bank raised its benchmark interest rate last
April to curb money oversupply and recently ordered banks to set
aside more reserves, reducing the amount of money available for
lending.
(China Daily August 3, 2006)