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China's machinery industry to maintain slow growth

(Xinhua) Updated: 2012-11-26 09:32

BEIJING - China's machinery industry should brace for continuing hardships and seek higher growth quality, as the industry was being hit hard by the country's economic slowdown, an expert said Sunday.

Cai Weici, vice-president of the China Machinery Industry Federation, said at a news briefing that the industry had experienced a persistent downward trend since the beginning of the year.

This has been illustrated by all major indices, including value-added output, profits and fixed asset investment.

The machinery industry's value-added output grew by 8.6 percent in the first nine months, 1.3 percentage points lower than the average growth rate of all industries during the same period, according to federation data.

A poll showed that orders received by companies tracked by the CMIF dropped 0.35 percent year-on-year during the first three quarters, indicating that the sector is still facing weak demand.

"At present, the growth rate of the sector is basically at its slowest level, but it is not likely to see any large further declines in the future," Cai said

He predicted that the industry will maintain the low level of growth in the fourth quarter.

The industry should brace for continuous hardship in the year to come and manufacturers will still face strong pressures of restructuring and upgrading to achieve sustainable growth, Cai said.

China's economy grew by 7.4 percent year-on-year in the third quarter, slowing for the seventh straight quarter and down from 7.6 percent in the second quarter and 8.1 percent in the first quarter, according to the National Bureau of Statistics.

"The machinery industry's growth has slowed down to a moderate speed after a period of rapid expansion," Cai said.

On the one hand, economic growth tends to slow down as demand gradually drops as China advances into the middle and latter stage of industrialization, he explained.

He said the sector will find it hard to maintain very high growth rates in the future, but it can still achieve moderate increases.

"New strategic industries including high-end equipment manufacturing will eventually become new pillars for the sector's sustainable growth," according to Cai.

China's 12th Five-Year Program for the 2011-2015 period made it clear that China would support seven new strategic industries, including new information technology, energy conservation and environmental protection, new energy, biology, new materials, high-end equipment manufacturing, and new-energy cars.

Among the seven industries, both high-end equipment manufacturing and new-energy cars belong to the machinery industry.

Cai said growth at a moderate speed is not necessarily a bad thing.

"Moderate growth of higher quality is more desirable than rapid growth of poor quality and the industry should dedicate itself to achieving this kind of high-quality growth," he said.

 

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