By Lin Huocan

The fundamental reason why trade deficit of the machine tool industry continues to expand is that China's machine tool industry has yet to shake off the development pattern that is largely characterized by scale expansion. With contradiction between the quickened upgrade of the demand structure in the domestic market and the supply capability of the industry, it's necessary for the industry to take faster steps towards the high-end market. 

According to statistics published by China Machine Tool & Tool Builders' Association recently, in 2011, China imported US$20.29 billion of machine tool products, an increase of 29.3 percent over the previous year; China exported US$8.9 billion machine tool products, an increase of 26.4 percent year on year.

These foreign trade numbers of machine tool industry show two things: first, with international markets recovering to various extents and emerging markets' demands for China's machine tool products going up, the export of China's machine tool products goes back up encouragingly, creating a new high record since 2008; second, China's import of machine tool products continues to grow at a rapid pace, import volume continues to increase, which is also at historic high, and export and import deficit of the machine tool industry has been broadening for the past 3 years. 

China is a large producer of machine tools, but foreign trade of the machine tool industry has always been in deficit. In 2001, the trade deficit of the machine tool industry grew bigger, the basic cause being the significant increase of import, with both the growth rate and the base volume of import bigger than those of export. China imports mainly medium- to high-end metal-cutting machine tools and molding tools that have rather high added value, but what China exports most are tools, props, grinding tools and abrasives; a large part of these exports are low-priced and low-end products and raw materials. The price difference between imported products and exported products doesn't help to reduce the deficit, either. 

"The fundamental reason why trade deficit of the machine tool industry continues to expand is that China's machine tool industry has yet to shake off the development pattern that is largely characterized by scale expansion", said Wang Liming, vice standing chairman of China Machine Tool & Tool Builders' Association. Mr. Wang points that although the production volume of China's machine tool industry has been large in the past years, the level of its products structure is rather low; it is still at the low end of the global industrial chain, unable to meet medium- and high-end demands in the domestic market; the medium- and high-end markets, particularly the latter, in China is dependent on import, and medium- and high-end numerical control systems and main function parts that are also highly dependent on import; these problems still exist.  

The gradual expansion of trade deficit has also resulted in the slipping inclination of the market share of Chinese machine tools in the domestic market, despite that demands in the domestic market have been growing at a faster pace. According to statistics, in 2011, the market share of domestic machine tools was 66.1 percent, 0.8 percent lower than that in the previous year.

"The contradiction between the accelerated upgrade of the structure of market demands and the supply capability of the industry has become the main contradiction that impedes the development of China's machine tool industry", said Wang Liming, who points out that presently users' demands for medium- to high-end products have increased markedly, but the technical level, overall service quality, and other factors of medium- to high-end domestic products are still unable to meet the requirements of the change.

In future market competition, international machine tool tycoons will continue to take advantage of high technology and use medium-end products that are assembled at low cost through high technology to impact the Chinese market. Therefore, China's machine tool industry must make efforts in medium- and high-end machine tools as soon as possible, and take faster steps towards the high-end market. According to the 12th Five-year Plan of the machine tool industry, the targets by 2015 is to enable domestic numerical control machine tools to take up 70 percent of the domestic market, increase the market share of domestic medium- to high-end numerical control systems in the domestic market from 20 percent to 50 percent, and increase the share of medium- to high-end function parts from 5 percent to 20 percent. 

So, China's machine tool enterprises should accelerate the reform of development pattern, unswervingly follow the development path that centers on inner strength development and technology advancement, and continue to improve enterprises' comprehensive competitiveness.