By Li Hui and Qi Hongming

In the first half of 2009, with a series of policies and measures issued by the government on "keep growth, expand domestic demand and adjust structure" taking effect increasingly, the economic operation in machinery industry presents a posture of "constant, stable and mild recovery". Production has recovered stably month by month since touching the bottom in February, the decrease of enterprise benefit has narrowed remarkably, the negative acceleration of export has been slowed down, and the pace in regulating the industrial structure of machinery industry has been expedited, and it is expected to keep a stable recovery situation continually for the whole year.

Production has a constant, stable and mild recovery

Recently, an industrial operation report released by China Machinery Industry Federation (CMIF) showed that in the first six months of 2009, the machinery industry production has walked out the valley bottom, the production situation has accelerated its improvement, and the industry has taken on a momentum of constant, stable and mild recovery on the whole.

In terms of production, in the first half of 2009, the total production value of China's machinery industry reached RMB4.79 trillion yuan, up 7.28 percent year on year, which has restrained the slide of growth rate since the end of last year. In June, 2009, the total production value of the month in machinery industry has exceeded RMB1 trillion yuan, setting the highest record historically and increasing by 11.65 percent year on year. The industrial value-added has stably increased month by month from the year-on-year growth rate of 5.4 percent in January and February of 2009 to 9.2 percent from January to June. Although compared with the same period of last year, the falling head is still very huge, it is recovering steadily. A "constant, stable and mild recovery" has become the major trait of the economic trend in machinery industry.

In terms of economic benefit index, all of main economic benefit indexes are improving gradually and transferring a positive signal. From January to May of this year, the operating revenue of main business in machinery industry reached RMB3.56 trillion yuan, up 4.23 percent year on year; the delivered tax is RMB122.89 billion yuan, up 10.09 percent year on year; the production/sale ratio of machinery products from January to June is 97.07 percent, rising 0.57 percentage than that in January and February of this year. It is shown from these date that the economic benefit of machinery industry in the first half of this year improves significantly than early 2009, although it has not reached the level prior to the international financial crisis, the decrease has narrowed obviously and entered the upgoing path.

"The improved situation in machinery industry has embodied that those policies and measures launched by the government have exerted positive functions on revitalizing machinery industry. Firstly, the implementation of proactive fiscal policy and moderately loose monetary policy has provided a favorable investment and consumption environment for machinery industry. Secondly, the timely launch of the plan on adjusting and revitalizing equipment manufacture industry has become an effective impetus for enterprises to answer the crisis and challenges and expedite development." Cai Weici, Executive Vice Chairman of CMIF told the reporter.

As understood, in the first two quarters of 2009, despite the increase range of production value of many machinery production enterprises narrowed, most enterprises and products have a promising future, and many highlights are still there in terms of overall situation in machinery industry. The operating revenue of main bushiness realized by China National Machinery Industry Corporation (CNMIC) reached RMB46.74 billion yuan in the first half of this year, up 18.8 percent year on year, having completed 55.0 percent of the whole-year business target. The operating revenue of Changsha Zoomlion Heavy Industry Science & Technology Development Co., Ltd. reached RMB9.27 billion yuan in the first half of this year, up 49.08 percent year on year. The favorable development momentum in large-scale key enterprises has laid a solid foundation for the stable recovery of the entire machinery industry and become a leader in driving industrial harmonious development.

Steps of adjusting industrial structure accelerate

In the first half of 2009, although China's machinery industry was subjected to many worries and discomposure, the effect of structural adjustment in machinery industry has been displayed. "The rapid growth in the industry cannot be supported by the output, but is based on the constantly increased market demand. Although a momentum of "constant, stable and mild recovery" takes on in machinery industry as a whole, in general, to realize a persistent and rapid growth in the whole industry, the industrial structural adjustment must be expedited further, and the transformation and upgrade must be promoted." said Cai Weici.

That benefit most from national policies on expanding domestic demand and have the most remarkable effect are agricultural machinery and auto industries. As understood, in the first two quarters of this year, driven by such policies as "giving allowance for agricultural machinery purchase" and "autos going to the countryside", the outputs of large and middle-sized tractors and combine harvesters urgently needed in agricultural production have increased by 32.02 percent, 27.82 percent and 43.14 percent respectively year on year. The output and sales volumes of autos from January to June are 5.99 million sets and 6.1 million sets with the year-on-year increases of 15.22 percent and 17.69 percent respectively.

In this May, the "Plan on adjusting and revitalizing equipment manufacture industry" issued by the State Council definitely proposed that the nine key industries/projects, such as iron and steel, automobile, petrochemistry, shipping, light industry, textile, nonferrous metal, electronic information and national defense and military industry, shall be attached importance to for equipment independence.

Impacted by this, in the first six months of this year, the strength of propulsion for localizing power equipment, metallurgy and mining equipment was greater with a relatively rapid production development, while the output of such products as machine industry, instruments and meters, and equipments for environmental prevention and control showed a decrease momentum.

Effect of transforming development modes emerges

"The international financial crisis has had the market demands reduced, as a result, the situation that the enterprises in machinery industry mainly depend on extensive growth in quantity has ended, and the industry is facing such problems as industrial structure adjustment, transformation and upgrade, which requires enterprises to transform from seeking for quantity and speed to seeking for the improvement in quality and internal work." said Cai Weici.

With the gradual implement of the government's RMB4-trillion-yuan investment plan, to expand domestic demand and increase the investment on fixed assets has become a robust power to drive the production in machinery industry. From January to June of this year, the sales value of domestic marketing in machinery industry rose 12.07 percent year on year. The investment on fixed assets valued RMB629.244 billion yuan has been made with the year-on-year increase of 43.85 percent, which is 10.25 percentage points higher than the growth rate of nationwide investments in cities and towns in the same period. In the thirteen sub-industries of the machinery industry, except the culture & office equipment and internal combustion engine industries have a negative growth in the investments on fixed assets, the investments on fixed assets in other eleven sub-industries have all increased in double figure.

In the first half of 2009, uniting and reorganizing the enterprises in the machinery industry has become an important force for industrial upgrade; through the reorganization, many enterprises have further optimized the internal management, and the industrial chain is more completed. In June, Shandong Heavy Industry Group Co., Ltd was officially established, which was reorganized by Weichai Holdings Group, Shandong Construction Machinery Co., Ltd and Shandong Automobile Industry Group Co., Ltd, and the total output value is expected to exceed RMB100 billion yuan in the future three years after the integration and reorganization.