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China: Overview of machinery industry development in the first half of 2019

| Author / Editor: http://www.mei.net.cn / Theresa Knell

Machinary Industry
Machinary Industry (Source: Baidu.com)

On August 8, the China Machinery Industry Federation held a press conference on the economic development situation of the machinery industry in the first half of 2019 in Beijing. In 2019, although the economic operation of the machinery industry was difficult and the pressure was large, positive factors still existed.

Since the beginning of the year, the growth rate of the machinery industry has sharply from 2 % in the first two months of the year to 6.3 % in the first quarter and fell to 4.2 % in the first half of the year. It is not only 4.2 percentage points lower than the same period last year, but also lower than the national average for industry and manufacturing in the same period.

Among the five categories of national industry mainly engaged in general plant engineering, specialized plant engineering, mechanical and instrument engineering rose by 5.1 %, 8.3 %, 10 % and 9.6 % respectively, higher than the average level of the machinery industry. The automobile manufacturing industry decreased by 1.4 % year-on-year which is much lower than the average level of the machinery industry.

In the first half of the year, the machinery industry achieved an operating result of 10.53 trillion yuan, an increase of 1.29% over the previous year, and an overall result of 619.537 billion yuan, a decrease of 8.58% over the previous year. The growth rate of the two indicators has fallen sharply compared to the previous year: the overall profit growth rate has changed from negative to negative and, for the first time in more than a decade, there has been negative growth. Compared to the national industry, the growth rate of operating income and overall mechanical engineering output is lower than the national industry average of 3.42 and 6.19 %, respectively.

Since the beginning of this year, the low level of the main economic indicators for the machinery industry has been strongly affected by the decline of the automotive industry. Excluding the automotive industry, the 13 sub-sectors of the branches achieved an overall operating result of 6.55 trillion yuan in the first half of the year, an increase of 6.06 % over the previous year, an overall result of 366.676 billion yuan, an increase of 6.9 6% over the previous year, both compared to machinery industry and to national industrial indicators. Below this, the growth rate of operating income from construction machinery, heavy mining machinery, food packaging machinery and robots, and intelligent manufacturing industry was over 10 %, indicating that the machinery industry is generally in good condition.

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Trend Forecast

Since the effects of the automotive industry this year, the economic activity of mechanical engineering has been under a certain pressure. Although the most important indicators are still in a reasonable range, the situation at the beginning of the year is more serious than expected. In June, the mechanical engineering index was 98.24, below the critical level for the fourth consecutive month, indicating that pressure on the industrial sector will continue in the future. At the same time, positive factors have been accumulating. Macroeconomic policies have increased support for the manufacturing industry, industrial policies have been gradually implemented and business confidence has begun to recover. The whole industry will continue to move towards high-quality development after adjustment.

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