☞Source: China Machinery Industry Federation            ☞Editor in charge: Shao Yujie

On August 8, 2023, the China Machinery Industry Federation held an information conference on the economic operation situation of the machinery industry in the first half of 2023 in Beijing. The meeting was presided over by Chen Bin, member of the Standing Committee of the Party Committee and Deputy Director of the Expert Committee of the China Machinery Industry Federation, Luo Junjie, member of the Standing Committee of the Party Committee and Executive Vice President of the China Machinery Industry Federation, released information on the economic operation of the machinery industry in the first half of 2023 and answered questions from reporters, and Chen Shihua, Deputy Secretary-General of the China Association of Automobile Manufacturers, attended the press conference.

2023 is the first year for the full implementation of the spirit of the 20th National Congress of the Communist Party of China. The machinery industry resolutely implements the decisions and arrangements of the Party Central Committee and the State Council, adheres to the principle of seeking progress while maintaining stability, forging ahead, and gradually eliminates the impact of the epidemic on the industry at the end of last year, while seizing opportunities and opening up the market, the main economic indicators in the first half of the year achieved rapid growth, high-quality development and orderly progress, and made positive contributions to stabilizing growth, employment and prices. Looking forward to the second half of the year, the domestic demand market of the machinery industry will further improve, and the development environment will continue to be optimized; However, at present, the industry is still facing problems such as sluggish market demand and difficulty in account collection, and there is downward pressure in some sub-industries.

First, the operation of the machinery industry in the first half of the year

Since the beginning of this year, the economic operation of the machinery industry has been stable and progressive, and a stable start has been achieved in the first quarter; In the second quarter, the upward trend was maintained, and in April and May, the indicators grew rapidly above the low base of the previous year, and the growth rate of the main indicators slowed down in June with the increase of the comparative base.

1.The characteristics of the economic operation of the industry

（1） The growth rate of added value has rebounded rapidly

In the first half of the year, the added value of the machinery industry increased by 9.7 percent year-on-year, 3.5 percentage points faster than that of the first quarter, which was 5.9 and 5.5 percentage points higher than the growth rate of the national industry and manufacturing industry in the same period, and the average growth rate in the past two years was 5.1 percent, which was 1.5 and 1.6 percentage points higher than that of the national industry and manufacturing industry. Among them, the electrical machinery and equipment manufacturing industry and the automobile manufacturing industry played a prominent leading role, with the growth rate of added value reaching 15.7% and 13.1% respectively; The special equipment manufacturing industry and the instrument manufacturing industry grew steadily, with a growth rate of 5.5% and 6.5%; The growth rate of the general equipment manufacturing industry was only 3.6%, which was lower than the growth rate of the national industry and manufacturing industry.

（2） The production and marketing situation of products has gradually recovered

In the first half of the year, among the 120 main products monitored by the machinery industry, the output of 58 products increased year-on-year, accounting for 48.3%; The output of 62 products decreased year-on-year, accounting for 51.7%. Compared with the first quarter, the proportion of products with increased output increased by 10 percentage points. Specifically, the production and sales of major products show the following characteristics: First, the production and sales of automobiles recovered for the better, and the production and sales of automobiles in the first half of the year were 13.248 million and 13.239 million respectively, an increase of 9.3% and 9.8% year-on-year respectively. Second, the electrical appliance industry continues to grow. In the first half of the year, the output of generator sets increased by 28.9% year-on-year, and the output of solar cells increased by 54.5%; The output of low-voltage switchboards, transformers and other power transmission and transformation products has also grown rapidly. Third, the international oil price is at a relatively high level, which is good for the related equipment market, and the production of petrochemical equipment has maintained rapid growth. Fourth, construction machinery by the real estate construction downturn and the cyclical impact of the industry, excavators and loaders in the first half of the year sales fell by 24% and 13.3% respectively. Fifth, the output of machine tool products declined, and the output of metal cutting machine tools and metal forming machine tools decreased by 2.9% and 11.9% respectively.

（3） The capacity utilization rate has rebounded steadily

The recovery of production has led to a steady recovery in the utilization rate of production capacity. In the first half of the year, the machinery industry was mainly involved in the national economic industry categories, and the capacity utilization rate of general equipment, special equipment, automobile and electrical machinery industries was 79.4%, 77.5%, 72.7% and 76.5% respectively; Compared with the first quarter, the capacity utilization level of the four industry categories has increased to varying degrees. Compared with the capacity utilization rate of the national industry and manufacturing industry, the capacity utilization rate of the automobile manufacturing industry is still at a low level, 1.7 and 2 percentage points lower respectively.

（4）Economic benefits and assets and liabilities have grown

Technological innovation leads the optimization and upgrading of product structure and promotes the rebound of economic efficiency indicators of the machinery industry. According to the data of the National Bureau of Statistics, the machinery industry achieved a total operating income of 13.6 trillion yuan in the first half of the year, a year-on-year increase of 9.4%; the total profit was 775.17 billion yuan, a year-on-year increase of 12.2%; The growth rate was 9.8 and 29 percentage points higher than that of the national industrial operating income and total profit in the same period. However, at the same time, the debt of the machinery industry has also grown rapidly, as of the end of June, the total debt increased by 13.9% year-on-year, 7.2 percentage points higher than the national industry, and the asset-liability ratio reached 58.8%.

（5）The trend of fixed asset investment is differentiated

Focusing on technological transformation and the research and development of a new generation of products, in the first half of the year, the investment in fixed assets of major categories of national economic industries mainly involved in the machinery industry increased, and the investment in fixed assets of general equipment, special equipment, automobiles, electrical machinery, and instrumentation industries increased by 3.7%, 7.7%, 20%, 38.9% and 24.1% year-on-year respectively. Among them, the electrical machinery industry, driven by battery manufacturing, power transmission and transformation and control equipment, has seen an investment growth rate of more than 33% since February 2022, showing a good trend; The fixed asset investment in the two basic industries of general equipment and special equipment showed a slowdown trend, with the growth rate falling by 3.9 and 2.9 percentage points compared with the first quarter, which was also lower than the growth rate of national industrial investment of 5.2 and 1.2 percentage points in the same period.

(6) Foreign trade maintained growth

According to the summary customs data, the total import and export volume of the machinery industry in the first half of the year was 536.1 billion US dollars, a year-on-year increase of 5.1%. Among them, imports were 143.5 billion US dollars, a year-on-year decrease of 14%; exports were 392.6 billion US dollars, a year-on-year increase of 14.4%; The trade surplus was 249.1 billion US dollars, a year-on-year increase of 41.2%, accounting for more than 60% of the national trade surplus. From the perspective of operating trends, compared with the first quarter, the decline in imports of the machinery industry has narrowed, the growth rate of exports has slowed down, and the growth rate of total import and export trade has accelerated.

(7) The ex-factory price index declined

Affected by the market supply and demand situation, since February this year, the ex-factory price index of the machinery industry has entered a downward range, and the decline has gradually deepened. In June, the ex-factory prices of machinery industry producers fell by 1.5% year-on-year, 3.9 percentage points narrower than that of industry. The ex-factory prices of general equipment, special equipment, automobiles, and electrical machinery industries decreased by 0.4%, 0.5%, 1.3% and 1.9% year-on-year respectively, and the instrumentation industry increased by 0.8%.

2.Highlights in the operation of the industry

With the implementation of various measures to improve and strengthen the real economy and promote industrial transformation and upgrading, the machinery industry has taken the initiative to take advantage of the trend, optimized the industrial structure, strengthened new kinetic energy, and steadily improved the quality of development.

（1） The improvement of equipment supply capacity promotes the green transformation of energy

The machinery industry practices the "double carbon" strategy, provides green power for the construction of a new energy supply system with clean energy as the main body, and a number of internationally advanced equipment has been put into use and the localization level has been improved. In the first half of the year, the energy equipment manufacturing industry completed a total operating income of 2.9 trillion yuan and a total profit of 138.88 billion yuan, a year-on-year increase of 13.9% and 18.1%, and contributed 30.3% and 25.3% to the growth of operating income and total profit of the machinery industry. The completion and acceptance of the core module of the world's first onshore commercial modular small reactor "Linglong No. 1" marks an important breakthrough in China's technological innovation of modular small reactors and the localization of major nuclear power technical equipment. The world's largest single capacity, the largest impeller diameter, and the lightest unit megawatt weight of the 16 MW offshore wind turbine were successfully hoisted, and the 18 MW offshore wind turbine was successfully developed. For the first time in China, the solid-state hydrogen power generation project of the electric hydrogen smart energy station of the electric hydrogen smart energy station applied to the photovoltaic power generation coupled with solid-state hydrogen storage in the power system was successfully connected to the grid.

（2）Intelligent and green transformation gathers new momentum for development

In the first half of the year, the relevant industries of strategic emerging industries in the machinery industry achieved a total operating income of 10.9 trillion yuan and a total profit of 607.92 billion yuan, a year-on-year increase of 10.4% and 15.6%, which was 1 and 3.4 percentage points higher than that of the machinery industry. From pilot to popularization and application, intelligent products have achieved a large number of application results in remote control and diagnosis, intelligent inspection, human-machine collaboration, etc.; A number of machinery companies have been shortlisted for intelligent manufacturing demonstration factories. The world's first 10-meter ultra-large intelligent shearer independently developed by China rolled off the production line, the first large-scale pumped storage artificial intelligence data analysis platform in China was put into operation, and the first self-developed hip and knee integrated orthopedic surgical robot in China was launched. The supply capacity of new energy and green equipment has been enhanced. In the first half of the year, the production and sales of new energy vehicles totaled 3.788 million and 3.747 million, with a year-on-year growth rate of more than 40%, and the sales of new energy vehicles reached 28.3% of the total sales of new vehicles. As of the end of June, the number of new energy vehicles in the country reached 16.2 million, accounting for 4.9% of the total number of vehicles. The development of new energy construction machinery has been accelerated, and electric forklifts, excavators, loaders, and mining dump trucks have been applied in batches. Electric forklifts account for more than 62% of the total number of forklifts; The sales volume of electric loaders has exceeded 1,100 units, which is close to the sales volume of last year. The world's first green shield machine and the world's largest tonnage hydrogen energy mining truck have been rolled off the assembly line and put into use.

（3） The quantity and quality have been stabilized, and the vitality of foreign trade development has been enhanced

In the complex and changeable international economic and trade environment, the scale of foreign trade in the machinery industry has grown steadily, the structure of export products has been continuously optimized, and the competitiveness of the international market has been enhanced. Exports of high-tech products have increased markedly. In the first half of the year, the "new three" of the new momentum of the country's foreign trade growth - electric manned vehicles, lithium batteries, and solar cells all came from the machinery industry, and the export value increased by 163.8%, 58.1%, and 10.4% year-on-year. In addition, the export of crawler excavators, loaders, road rollers, bulldozers, electric forklifts, all-terrain cranes, and off-highway mining dump trucks with high technical content in construction machinery has also achieved rapid growth. Made in China has joined the construction and development of countries around the world more extensively, providing electrical equipment for the construction of the Mingaichaur gas-fired power plant with the largest installed capacity in Azerbaijan, construction machinery for the construction of the first nuclear power plant in Bangladesh, and complete sets of port machinery for the high-end market in North America. In the first half of this year alone, the machinery industry has provided machinery and equipment for more than 230 countries and regions around the world.

（4）The construction of the innovation system has been steadily promoted, and innovative achievements have been emerging

As of the end of June, the machinery industry has been listed for operation and approved construction of 260 innovation platforms, including 130 engineering research centers, 121 key laboratories, and 9 innovation centers. The construction of the innovation system has strongly supported the innovation and development, and the bright spots of the development of heavy weapons in major countries have appeared frequently. The world's largest tower crane with a rated lifting moment of 20,000 tons and meters has rolled off the assembly line, which will be used for the construction of the world's largest span three-tower cable-stayed bridge - Ma'anshan road and railway dual-purpose Yangtze River Bridge project. Successfully developed the world's first 12,000-meter ultra-deep well automatic drilling rig with completely independent intellectual property rights, providing a solid equipment guarantee for challenging the limits of deep ground and developing ultra-deep oil and gas resources. Successfully developed the world's first outdoor intelligent 50,000kVA/110kV on-load dry-type transformer with the largest capacity, which is cleaner than the oil-immersed transformer and meets the environmental protection requirements of the project in the water source area. Successfully developed the world's first set of 3,000-ton OMB multi-nozzle opposed pulverized coal pressurized gasifier, achieving a historic breakthrough in key core technologies and equipment in the field of coal chemical industry.

（5）The basic capacity of the industry and the modernization of the industrial chain continue to improve

Focusing on the disadvantages, aiming at the stuck points and breakpoints of the industrial chain, the machinery industry has increased research and development efforts, improved basic capabilities, and made new progress in consolidating and stabilizing the chain. The "chip-level" independent controllable excitation system and governor system of China's first 300 MW pumped storage unit installed in Unit 7 of Guangzhou Pumped Storage Power Station are running stably, which effectively enhances the competitiveness and safety of China's pumped storage industry chain and supply chain. The world's largest power 20MW semi-direct-drive permanent magnet wind turbine successfully rolled off the production line, marking a new level of independent research and development capability of China's high-power offshore wind power generator. The world's first ammonia-hydrogen fusion composite power fuel supply system successfully developed was successfully ignited in FAW Jiefang liquid ammonia direct injection zero-carbon internal combustion engine, marking that China has made important progress in the research and development of ammonia-hydrogen fusion internal combustion engines for commercial vehicles. The first 150 MW large-scale impact turbine runner in China was successfully rolled off the assembly line, marking a major breakthrough in the core components of China's impact turbine "from scratch".

Second，Difficulties and problems faced in the operation of the industry

The indicators of rapid growth have boosted the confidence of the industry, but objectively, the low base of comparison in the previous year is a reason for the formation of the main indicators of the machinery industry in the second quarter. Judging from the two-year average growth rate, the growth rate of operating income and total profit of the machinery industry in the first half of the year was 7.4% and 2.8% respectively, which is significantly different from the double-digit year-on-year growth rate of the above indicators in the first half of the year; At present, the operation of the machinery industry is still facing multiple risks and challenges from internal and external sources, and the pressure on the smooth operation of the industry still exists.

1. The pressure to maintain the growth of foreign trade has increased

In the first half of the year, China's economic recovery showed a wave like development and a tortuous progress, with domestic demand recovering less than expected and the mechanical product market not thriving. Since April, the manufacturing PMI new order index has been below the critical value for four consecutive months. Mechanical enterprises have insufficient and mostly short orders on hand. A recent special survey shows that 60% of companies have reported insufficient orders, an increase of 6 percentage points from the end of the first quarter; 34% of companies only meet the production needs of nearly a month in their current orders, 48% meet the production needs of the third quarter of this year, and some signed projects have been delayed in execution. A comprehensive and effective recovery of the market may require a certain recovery period.

(3) The problem of difficult account recovery still plagues the whole industry

As of the end of June, the total accounts receivable of the machinery industry was 7.7 trillion yuan, an increase of 19.7% year-on-year, 9 percentage points higher than the growth rate of the national industrial accounts receivable in the same period, accounting for more than 1/3 of the total industrial accounts receivable in the country, and the average recovery period of the accounts receivable of the machinery industry was 96 days, 7.3 days higher than the same period last year, and 32.8 days higher than the national industrial average (63.2 days) in the same period. The results of the special survey show that in the first half of the year, 56% of the enterprises accounted for accounts receivable increased, and 24% of the enterprises remained flat; 48% of enterprises reported that the amount of overdue accounts receivable increased year-on-year.

(4) The downward pressure on some industries is greater

Under the high growth rate, the operation of some industries in the machinery industry is clearly differentiated, and some industries are facing greater downward pressure. At the end of last year, the emission standards of the agricultural machinery industry were switched and related products were cleared. After a short replenishment cycle at the beginning of the year, production slowed significantly. In the first half of the year, the output of 7 of the 10 key monitoring products declined, and the industry's operating income decreased by 10.7% year-on-year, and the total profit decreased by 12%. Bearings, fasteners, industrial chains and other large and wide range of basic parts are mainly used for fuel vehicles, with the rapid development of new energy vehicles, the proportion of traditional fuel vehicles is declining. In the first half of the year, traditional fuel vehicles accounted for 71.4% of the total automobile production, down 6.6 percentage points from the same period last year, and the supporting enterprises in the original industrial chain were under pressure. In the first half of the year, the operating income of the mechanical basic parts industry fell by 1.6% year-on-year, and the added value of the general equipment manufacturing industry in June turned from positive to negative, down 0.2% year-on-year, and the decline in the second half of the year may continue to expand.

Third， Prediction of the annual operation trend of the machinery industry

With the support of the overall recovery of the demand market and various national policies, the machinery industry operated stably in the first half of the year, laying a good foundation for the completion of the expected goals for the whole year. Looking forward to the second half of the year, the factors that are conducive to the operation and development of the machinery industry are being released one after another. First of all, the macro policy regulation and control efforts have been strengthened, and a number of policies and measures to promote consumption, stabilize investment, and improve the business environment have been intensively introduced recently. Secondly, with the further start of construction of major projects and key projects in the "14th Five-Year Plan", the acceleration of infrastructure construction, the development of real estate out of the valley, and the acceleration of the high-end, intelligent and green transformation of traditional industries, the demand market is expected to accelerate its recovery.

However, it should be noted that in the second half of the year, the pressure on the machinery industry to achieve stable operation still exists. On the one hand, the risk of recession in the world economy is rising, inflation expectations are persistent, and the escalation of geopolitical conflicts threatens the recovery of global trade. On the other hand, although the triple pressure on the domestic market has been alleviated, it is still facing multiple tests such as weak endogenous momentum, sluggish demand, and new obstacles to economic transformation.

Comprehensive analysis, in the second half of the machinery industry economic operation will maintain a steady growth trend, with the comparison base raised, the growth rate of the main indicators gradually slowed down, the annual industrial added value, operating income, total profits and other indicators growth rate in about 5%, foreign trade import and export is basically stable.

This year is a crucial year for the implementation of the 14th Five-Year Plan, the external environment is complex and severe, and the domestic economy is facing new difficulties and challenges. The whole industry of the machinery industry will resolutely implement the decisions and arrangements of the Party Central Committee and the State Council, boost confidence, work hard, promote the high-end, intelligent and green development of the industry, solidly promote the construction of new industrialization and modern industrial system, forge ahead on a new journey with a new spirit and new look, make contributions to the new era, and make new and greater contributions to the successful completion of the "14th Five-Year Plan" goals and tasks and the realization of high-quality development of the machinery industry!