China's machinery sector growth to reach 5% in 2023

The major performance indicators in China's machinery manufacturing sector suggest that in 2023 growth should be around 5% on year, based on the premise that no significant declines are seen in the international market and COVID-19 situation is well controlled across the country, Luo Junjie, executive vice president of the China Machinery Industry Federation predicted at Mysteel's annual conference in Shanghai on December 30.

Luo told delegates that operations among member firms of the country's machinery industry for full-year 2022 could be summarized as: "the situation is getting better, while the pressure is increasing due to the COVID-induced impact."

Last year, growth in industrial added value and operating revenue of the country's machinery makers is thought to have reached about 4.5% and 5.5% respectively, while total profits earned by member enterprises will likely remain unchanged from 2021 and machinery imports and exports will also stay largely stable on year, according to Luo. The Federation groups makers of equipment in 14 sub-sectors such as automotive manufacturing, machine tools and construction machinery, Mysteel Global notes.

For 2021, the operating revenue and gross profits of the industry rose by 15.6% and 11.6% respectively on year to Yuan 26 trillion ($3.8 trillion) and Yuan 1.6 trillion. Meanwhile, the machinery industry's added value rose by 10% on year, and its foreign trade value totaled Yuan 1.04 trillion, according to the data from the National Bureau of Statistics.

Over January-November last year, the import and export value of Chinese machinery products totaled $980.3 billion, 4.3% higher on year, indicating rapid growth in the foreign trade value of the sector, Luo said.

At the same time, the domestic machinery industry faces several issues, Luo pointed out, citing insufficient orders, rising cost pressures, difficulty in debt collection, and increasing export competition as the main challenges.

Among these, rising costs is the biggest problem, Luo stressed, saying that in 2022, "prices of finished steel products - the main raw material used by machinery makers - gradually stabilized, while prices of non-ferrous metals fluctuated at high levels."

The purchase prices of raw materials and those of spare parts and accessories have climbed into a higher price range, he noted, while total wages among industry employees also gained by 2.18% from the 2021 average.

Written by Rong Zhang, zhangronga@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.