In the first half of 2024, the scale of the machinery industry continued to expand, and the investment growth rate slowed down from a high level. A number of major technical equipment and innovative achievements have emerged, and the resilience and safety level of the industrial chain and supply chain have continued to improve.

China Industry Daily reporter recently learned from the information release conference on the economic operation situation of the machinery industry in the first half of 2024 that in the first half of the year, the machinery industry effectively responded to risks and challenges, accelerated the cultivation of new momentum and new advantages, and actively promoted high-end, intelligent and green development. The overall economic operation of the industry was stable, and high-quality development was steadily promoted.

At the same time, insufficient demand and downward prices, high accounts receivable, difficult recovery, negative growth in economic benefits, and increased pressure on foreign trade growth continued to highlight industry problems.

"Based on comprehensive judgment, it is expected that the economic operation of the machinery industry in the second half of the year will continue the overall trend of stability and progress, and the growth rate of major economic indicators for the whole year is expected to be above 5%, and foreign trade will remain basically stable." Luo Junjie, executive vice president of the China Machinery Industry Federation, predicted.

The industrial scale continues to expand the value -added growth rate is generally stable

In the first half of the year, the added value of the five major categories of national economic industries mainly involved in the machinery industry all achieved year-on-year growth.

Data from the National Bureau of Statistics show that the economic operation of the machinery industry started well in the first quarter of this year, and the stable development trend remained stable in the second quarter. The overall economic operation in the first half of the year was stable and made steady progress.

Luo Junjie gave a detailed introduction to the basic characteristics of the economic operation of the machinery industry in the first half of the year.

The scale of the industry continued to expand. As of the end of June 2024, the number of enterprises above designated size in the machinery industry was 130,000, an increase of 11,000 from the end of June last year, accounting for 25.8% of the national industry, an increase of 0.8 percentage points from the same period last year; total assets reached 37.6 trillion yuan, an increase of 6.8% year-on-year, accounting for 21.8% of the national industry, an increase of 0.2 percentage points from the same period last year.

The growth rate of added value was generally stable. In the first half of the year, the added value of enterprises above designated size in the machinery industry increased by 6.1% year-on-year, a slightly higher growth rate than the national industry by 0.1 percentage point, but lower than the manufacturing industry by 0.4 percentage points. The added value of the five major categories of national economic industries mainly involved in the machinery industry all achieved year-on-year growth. Among them, the automobile industry played a significant role in driving the industry, with an added value of 9.8% year-on-year; the added value growth rates of general equipment, special equipment, electrical machinery and instrumentation industries slowed down, at 2.8%, 2.1%, 4.7% and 5.2% respectively.

Product production and sales were stable and improving. In the first half of the year, among the 122 key monitored mechanical products, the output of 75 types increased year-on-year, accounting for 61.5%; the output of 47 types decreased year-on-year, accounting for 38.5%. The production and sales characteristics of key products are mainly manifested as follows: First, automobile production and sales remained strong. In the first half of the year, automobile production and sales were 13.891 million and 14.047 million respectively, up 4.9% and 6.1% year-on-year respectively; among them, new energy vehicles continued to advance by leaps and bounds. Second, driven by the construction of clean energy and smart grids, the production of electrical equipment continued to be high. Third, the acceleration of equipment investment drove the growth of processing equipment. In the first half of the year, the output of metal cutting machine tools was 333,000 units, up 5.7% year-on-year; the output of industrial robots was 283,000 sets, up 9.6% year-on-year. Fourth, the production of engineering machinery stabilized at a low level. In the first half of the year, the output of excavators was 149,000 units, a year-on-year increase of 7.7%; in May and June, the output of loaders and concrete machinery turned positive year-on-year. Fifth, benefiting from the market recovery, the output of products serving the consumer sector continued to rise, and the output of service robots and packaging special equipment increased by 22.8% and 7.8% respectively.

The investment growth rate slowed down from a high level. After three consecutive years of double-digit rapid growth, the fixed asset investment in the machinery industry has continued to grow since 2024, but the growth rate has slowed down. In the first half of the year, the fixed asset investment in the machinery industry increased by 9.3% year-on-year, and the growth rate was significantly slower than that of the previous year. Among the five major national economic industries involved in the machinery industry, the investment growth rates of general equipment and special equipment were relatively high, at 14.0% and 12.6% respectively; the investment growth rates of automobiles, electrical machinery and instrumentation were relatively low, at 6.5%, 3.5% and 4.5% respectively. Except for electrical machinery, the investment growth rates of the five major industries were all higher than the growth rate of fixed asset investment in the whole society (3.9%).

Goods trade has been stable and progressing. Since the beginning of this year, the foreign trade of the machinery industry has continued the good trend of the previous year. According to customs data, in the first half of the year, the total import and export volume of the machinery industry was US$557.94 billion, a year-on-year increase of 4.1%, accounting for 18.7% of the national trade in goods. Among them, the import volume was US$143.39 billion, a year-on-year decrease of 0.1%, accounting for 11.2% of the national trade in goods; the export volume was US$414.55 billion, a year-on-year increase of 5.6%, accounting for 24.3% of the national trade in goods; and the trade surplus was US$271.16 billion, a year-on-year increase of 8.9%, accounting for 62.3% of the national trade in goods. From the perspective of products, in terms of exports, the export of main machine and complete machine products continued to maintain a good growth trend, and the export of general machinery and parts products stabilized and rebounded.

The prosperity index fell and stabilized. The machinery industry prosperity index covers multiple dimensions such as production, investment, foreign trade, and economic benefits, and comprehensively reflects the operation of the machinery industry. Affected by factors such as the base of the previous year, the machinery industry prosperity index in the first half of this year showed a trend of falling and stabilizing. The business climate index was as high as 106.6 in February, and then fell month by month. The decline gradually decreased and tended to stabilize, reaching 103.0 in June. The business climate index in each month was in the prosperity range.

Insufficient orders for mechanical products increase pressure on foreign trade growth

The foreign trade market of the machinery industry faces many uncertainties. First, the products with rapid export growth in the early stage have declined significantly. Second, more and more machinery products have become the target of international trade disputes.

In the first half of the year, the internal and external environment faced by the machinery industry is still complicated, and there are still a series of difficulties and problems in the operation of the industry, and the foundation for recovery is still not solid.

Luo Junjie pointed out that the difficulties and problems in the operation of the machinery industry in the first half of the year are mainly reflected in four aspects.

First, insufficient demand and downward prices. Market demand is still sluggish, and there are insufficient orders for machinery products. In the first half of the year, the manufacturing PMI index was below the critical value for 4 months, and the new order index, new export order index and order on hand index in June were all below the critical value, showing a low level. A special survey of key enterprises in the machinery industry showed that as of late June, nearly 70% of enterprises reported that there were insufficient orders, and at the same time, short orders became the norm. The order status of private enterprises and small and medium-sized enterprises is worse than the average level of the whole industry. Insufficient orders have led to a decline in capacity utilization. In the first half of the year, the capacity utilization rates of the major categories of the machinery industry all fell, among which the capacity utilization rates of the automobile and electrical machinery industries fell to 68.8% and 73.8%, respectively, down 3.9 and 2.7 percentage points year-on-year.

Weak demand and insufficient orders have led to fierce market competition and continued downward product prices. In the first half of the year, the year-on-year decline in the ex-factory prices of the machinery industry has always been around 2%, with a decline of 1.9% in June. The ex-factory prices of the five major categories of national economic industries involved in the machinery industry all fell year-on-year in June. In the same month, the ex-factory prices of raw materials rose by 1.6% year-on-year, especially the price increase of non-ferrous metal products reached double digits. The price of the machinery industry itself fell while the price of raw materials rose, squeezing the profit space of the industry in both directions.

Second, high accounts receivable are difficult to recover. In recent years, the problem of difficulty in recovering accounts receivable in the machinery industry has continued, becoming a prominent problem affecting the capital turnover and production and operation of enterprises. As of the end of June this year, the total amount of accounts receivable in the machinery industry reached 8.5 trillion yuan, an increase of 8.3% year-on-year, 7.3 percentage points higher than the operating income in the same period; accounts receivable accounted for 34.7% of current assets, 0.7 percentage points higher than the same period last year; the average collection period of accounts receivable was 103.2 days, 7.9 days longer than the same period last year, 37 days higher than the national industry in the same period. Among them, the average collection period of accounts receivable in the construction machinery industry and heavy machinery industry exceeded 140 days.

Special surveys show that as of late June, 52% of enterprises had year-on-year accounts receivable, and 35% of enterprises had year-on-year increases in overdue amounts in accounts receivable. Affected by this, the capital turnover rate of the machinery industry decreased and the asset-liability ratio increased. In the first half of the year, the turnover rate of current assets in the machinery industry was only 1.2 times, a year-on-year decrease of 0.1 times, 0.3 times lower than the national industry; the asset-liability ratio was 59.2%, an increase of 0.2 percentage points year-on-year, 1.6 percentage points higher than the national industry.

Third, economic benefits showed negative growth. Affected by multiple factors such as weak demand and insufficient orders, fierce competition and falling prices, and high accounts receivable and difficult to recover, the economic benefits of the machinery industry have declined. Since March, the total profit of the machinery industry has been declining year-on-year for many consecutive months.

In the first half of the year, the operating income of enterprises above designated size in the machinery industry was 14.2 trillion yuan, an increase of only 1.0% year-on-year, 1.9 percentage points lower than the national industry; the total profit was 735.18 billion yuan, a year-on-year decrease of 6.3%, 9.8 percentage points lower than the national industry. The proportion of operating income and total profit in the national industry was 21.9% and 20.9% respectively, down 0.4 and 2.2 percentage points from the same period last year. The operating income profit margin was 5.2%, 0.4 percentage points lower than the same period last year and 0.2 percentage points lower than the national industry.

Fourth, the pressure on foreign trade growth has increased. The foreign trade market of the machinery industry faces many uncertainties. First, the products with rapid export growth in the early stage have declined significantly. In the first half of the year, the export amount of tractors, excavators, lithium-ion batteries, photovoltaic products, etc. all decreased year-on-year. Second, more and more machinery products have become the target of international trade disputes. Since the beginning of this year, the United States has announced additional tariffs on my country's electric vehicles, electric vehicle lithium-ion batteries, battery components, solar cells, ship-to-shore cranes and other products; the European Union has announced additional temporary anti-subsidy duties on my country's electric vehicles, additional temporary dumping duties on aerial work platforms, and anti-subsidy investigations on wind turbine suppliers; Turkey has announced that the policy of additional tariffs on some of my country's electric vehicles will be extended to all cars; Brazil has announced a gradual increase in tariffs on my country's electric vehicles, etc. Under the influence of various factors, the pressure on the growth of foreign trade in the machinery industry has increased significantly.

Favorable factors are gathering and increasing, and the second half of the year will see steady progress

The implementation of the Action Plan for Promoting Large-Scale Equipment Renewal and Consumer Goods Trade-in and its supporting measures will release effective market demand for the machinery industry.

Looking forward to the second half of the year, the adverse effects of changes in the external environment will increase. The world is in turmoil, the century-old changes are accelerating, international political disputes and military conflicts have broken out at multiple points, and the growth momentum of the world economy and international trade is insufficient; developed economies have increased their demands for diversified supply chains, trade protectionism is prevalent, and more and more machinery products have become the target of international trade disputes; the game between major countries in key areas has intensified. There is still insufficient effective demand in China, economic operation has diverged, there are still many risks and hidden dangers in key areas, and there are pains in the conversion of new and old kinetic energy.

"But the basic trend of my country's overall long-term recovery and improvement has not changed, and the favorable factors supporting the stable operation and high-quality development of the machinery industry continue to gather and increase." Luo Junjie said.

First, the recent meeting of the Political Bureau of the Central Committee studied and deployed economic work in the second half of the year, and once again emphasized the need to adhere to the general tone of work of seeking progress while maintaining stability, increase macro-control efforts, deepen innovation-driven development, deeply tap the potential of domestic demand, continuously enhance new kinetic energy and new advantages, enhance the vitality of business entities, stabilize market expectations, and enhance social confidence. The policy effects will continue to improve the development environment of the machinery industry, release market potential, enhance development confidence, and provide a solid foundation and impetus for the stable development of the industry.

Second, the "Action Plan for Promoting Large-Scale Equipment Updates and Consumer Goods Replacement" and its supporting measures have been implemented, deploying four major actions: equipment update, consumer goods replacement, recycling and recycling, and standard improvement. Recently, several measures have been introduced to increase support for large-scale equipment updates and consumer goods replacement, which will effectively promote investment and consumption and release effective market demand for the machinery industry.

Third, the Third Plenary Session of the 20th CPC Central Committee proposed "to improve the system and mechanism for developing new quality productivity in accordance with local conditions, and to improve the system for promoting the deep integration of the real economy and the digital economy", emphasizing the need to "develop new quality productivity in accordance with local conditions, accelerate the cultivation of new foreign trade momentum, and solidly promote green and low-carbon development", which provides a fundamental follow-up and development direction for the reform and development of the entire industrial economy, including the machinery industry. With the continuous refinement and implementation of relevant policies and measures, the machinery industry will burst out with greater development momentum and stimulate greater development potential.

Fourth, relying on the advantages of its super-large-scale market, the machinery industry has deepened the supply-side structural reform, insisted on innovation-driven and integrated development, and accelerated the cultivation of new momentum and new advantages. The industrial foundation has continued to consolidate, the resilience of the industrial chain and supply chain has continued to improve, and the endogenous driving force for industry development has continued to increase.

Reprinted from: China Industrial News