Gradual recovery of economic operation, innovation leading industrial upgrading - Economic operation of the machinery industry in the first half of 2023
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 Executive Vice President of China Machinery Industry Federation, Luo Junjie, has released information on the economic operation of the machinery industry in the first half of 2023. The information release is now published below for your reference and learning.
Economic operation gradually recovers, innovation leads industrial upgrading
——Economic Performance of the Machinery Industry in the First Half of 2023
2023 is the starting year for fully implementing the spirit of the 20th National Congress of the Communist Party of China. After three years of heavy tests from the pandemic, China's economy is gradually recovering. The machinery industry resolutely implements the various decisions and deployments of the Party Central Committee and the State Council, adheres to steady progress, and forge ahead. While gradually eliminating the impact of the epidemic on the industry at the end of last year, it seizes opportunities and explores markets. In the first half of the year, major economic indicators achieved rapid growth, and high-quality development was orderly promoted, making positive contributions to stabilizing growth, employment, and prices. Looking ahead to the second half of the year, the domestic demand market for the machinery industry will further improve and the development environment will continue to optimize; However, the current industry still faces problems such as sluggish market demand and difficulty in recovering accounts, and some sub industries are under downward pressure.
1、 Operation of Machinery Industry in the First Half of the Year
Since the beginning of this year, the economic operation of the machinery industry has made steady progress, achieving a stable start in the first quarter; The second quarter maintained an upward trend, with various indicators growing rapidly in April and May above the low base of the previous year. In June, with the increase of the comparison base, the growth rate of major indicators slowed down.
（1） Characteristics of Industry Economic Operation
1. The growth rate of added value is rapidly recovering
In the first half of the year, the added value of the machinery industry increased by 9.7% year-on-year, accelerating by 3.5 percentage points compared to the first quarter, and higher than the national industrial and manufacturing growth rates of 5.9 and 5.5 percentage points during the same period; The average growth rate in the past two years has been 5.1%, which is 1.5 and 1.6 percentage points higher than the national industrial and manufacturing industries. Among them, the electrical machinery and equipment manufacturing industry and the automobile manufacturing industry have played a prominent driving role, with added value growth rates of 15.7% and 13.1% respectively; The specialized equipment manufacturing industry and instrument manufacturing industry have steadily grown, with growth rates of 5.5% and 6.5%, respectively; The growth rate of the general equipment manufacturing industry is only 3.6%, lower than the national industrial and manufacturing growth rate.
2. The production and sales situation of products is gradually recovering
Among the 120 key products monitored by the machinery industry in the first half of the year, 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 to the first quarter, the proportion of products with increased production has increased by 10 percentage points. Specifically, the production and sales of the main products show the following characteristics: firstly, the production and sales of automobiles have recovered and improved. In the first half of the year, the production and sales of automobiles reached 13.248 million and 13.239 million respectively, an increase of 9.3% and 9.8% year-on-year. Secondly, the electrical industry continues to maintain growth. The investment in power supply and grid remains high, driving the sustained and rapid growth of power equipment production. 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 production of low-voltage switchgear, transformers and other power transmission and transformation products has also grown rapidly. Thirdly, the relatively high international oil prices are favorable for the related equipment market, and the production of petrochemical equipment maintains rapid growth. Fourthly, due to the sluggish real estate construction and cyclical impact of the industry, the sales of excavators and loaders in the first half of the year decreased by 24% and 13.3% respectively. Fifth, the production of machine tools has decreased, with metal cutting and metal forming machine tools decreasing by 2.9% and 11.9% respectively.
3. Capacity utilization rate steadily rebounds
The recovery of production has steadily boosted the utilization rate of production capacity. In the first half of the year, the main categories of national economic industries involved in the machinery industry were general equipment, specialized equipment, automobiles, and electrical machinery, with capacity utilization rates of 79.4%, 77.5%, 72.7%, and 76.5%, respectively; Compared with the first quarter, the capacity utilization levels of the four major industry categories have all increased to varying degrees. Compared with the national industrial and manufacturing capacity utilization rate, 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 dual growth of assets and liabilities
Technological innovation leads the optimization and upgrading of product structure, promoting the recovery of economic performance indicators in the machinery industry. According to data from the National Bureau of Statistics, the machinery industry achieved a cumulative operating revenue of 13.6 trillion yuan in the first half of the year, a year-on-year increase of 9.4%; Achieve a total profit of 775.17 billion yuan, a year-on-year increase of 12.2%; The growth rate is 9.8 and 29 percentage points higher than the national industrial operating income and total profit during the same period. However, at the same time, the debt of the machinery industry has also grown rapidly, with a total year-on-year increase of 13.9% as of the end of June, which is 7.2 percentage points higher than the national industrial sector; The asset liability ratio reached 58.8%.
5. Trend differentiation of fixed assets investment
Focusing on technological transformation and new generation product research and development, in the first half of the year, the major categories of fixed assets investment in the national economy industries mainly involved in the machinery industry achieved growth, and the fixed assets investment in the general equipment, special equipment, automobile, electrical machinery, and instrumentation industries increased by 3.7%, 7.7%, 20%, 38.9%, and 24.1% year on year respectively. Among them, driven by the fields of battery manufacturing, power transmission and transformation, and control equipment, the investment growth rate of the electrical machinery industry has remained above 33% since February 2022, showing a good trend; However, fixed assets investment in general equipment and special equipment, two basic industries, showed a slowdown trend, with the growth rate falling 3.9 and 2.9 percentage points from the first quarter, and also 5.2 and 1.2 percentage points lower than the growth rate of national industrial investment in the same period.
6. Foreign trade maintains growth
According to the summary of customs data, the machinery industry achieved a total import and export volume of 536.1 billion US dollars in the first half of the year, a year-on-year increase of 5.1%. Among them, imports amounted to 143.5 billion US dollars, a year-on-year decrease of 14%; Exports amounted to 392.6 billion US dollars, a year-on-year increase of 14.4%; We achieved a trade surplus of 249.1 billion US dollars, a year-on-year increase of 41.2%, accounting for over 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. Factory price index declines
Affected by the market supply and demand situation, the ex factory price index of the machinery industry has entered a downward range since February this year, and the decline has gradually deepened. In June, the ex factory prices of the machinery industry decreased by 1.5% year-on-year, a decrease 3.9 percentage points narrower than that of the industrial sector. The main industries involved in the machinery industry have seen a decrease in factory prices, with general equipment, specialized equipment, automotive, and electrical machinery industries experiencing year-on-year declines of 0.4%, 0.5%, 1.3%, and 1.9%, respectively. The instrumentation industry has grown by 0.8%.
（2） Highlights in the operation of the industry
With the effective implementation of various measures to optimize and strengthen the real economy and promote industrial transformation and upgrading, the machinery industry has taken the initiative to move forward, optimize the industrial structure, strengthen new driving forces, and steadily improve the quality of development.
1. Enhancing equipment supply capability to promote green energy transformation
The machinery industry implements 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 batch of internationally advanced equipment is put into use and the level of localization is improved. In the first half of the year, the energy equipment manufacturing industry achieved a cumulative operating revenue 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%, respectively. Its contribution to the growth of operating revenue and total profit of the machinery industry reached 30.3% and 25.3%, respectively. The completion and acceptance of the core module of the world's first land-based commercial modular small reactor, Linglong 1, marks an important breakthrough in China's innovation in modular small reactor technology and the localization of major nuclear power equipment. The world's largest single unit capacity, largest impeller diameter, and lightest unit weight of 16 MW offshore wind turbines have been successfully hoisted, and 18 MW offshore wind turbines have been successfully developed. For the first time in China, photovoltaic power generation coupled with solid-state hydrogen storage has been successfully connected to the grid for the electric hydrogen smart energy station solid-state hydrogen energy generation project in the power system.
2. Intelligent and green transformation gathers new driving forces for development
In the first half of the year, the strategic emerging industries related to the machinery industry achieved a cumulative operating revenue of 10.9 trillion yuan and a total profit of 607.92 billion yuan, an increase of 10.4% and 15.6% year-on-year, respectively, with growth rates 1 and 3.4 percentage points higher than those of the machinery industry. Intelligent products have achieved significant application results in remote control and diagnosis, intelligent inspection, human-machine collaboration, and other aspects from pilot to promotion and application; A group of mechanical enterprises have been shortlisted as demonstration factories for intelligent manufacturing. The world's first 10 meter ultra large mining height intelligent coal mining machine independently developed by China has been launched, the first large-scale pumped storage artificial intelligence data analysis platform in China has been put into operation, and the first domestically developed hip and knee integrated orthopedic surgical robot has been launched. The supply capacity of new energy and green equipment has been enhanced. In the first half of the year, the cumulative production and sales of new energy vehicles reached 3.788 million and 3.747 million respectively, with a year-on-year growth rate of over 40%. The sales of new energy vehicles accounted for 28.3% of the total sales of new cars; As of the end of June, the total number of new energy vehicles in China reached 16.2 million, accounting for 4.9% of the total number of vehicles. The development of new energy engineering machinery is accelerating, and electric forklifts, excavators, loaders, mining dump trucks, etc. have been widely used. The proportion of electric forklifts in the total number of forklifts has exceeded 62%; The sales of electric loaders have exceeded 1100 units, approaching the annual sales of last year. The world's first green shield tunneling machine and the world's largest tonnage hydrogen energy mining truck have been taken offline and put into use.
3. Stable quantity and improved quality, enhanced vitality in foreign trade development
In the complex and ever-changing international economic and trade environment, the scale of foreign trade in the machinery industry has steadily increased, the export product structure has been continuously optimized, and the international market competitiveness has been enhanced. The export of high-tech products has significantly increased. In the first half of the year, the "three new drivers" of China's foreign trade growth - electric manned vehicles, lithium batteries, and solar cells - all came from the machinery industry, with export amounts increasing by 163.8%, 58.1%, and 10.4% year-on-year. In addition, the export of high-tech tracked excavators, loaders, rollers, bulldozers, electric forklifts, all terrain cranes, and off highway mining dump trucks in construction machinery has also achieved rapid growth. Made in China has become more widely involved in the construction and development of various countries around the world, providing electrical equipment for the construction of the largest installed capacity Minggaichauer gas power plant in Azerbaijan, engineering 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 mechanical equipment to over 230 countries and regions worldwide.
4. The construction of the innovation system is steadily advancing, and innovative achievements continue to emerge
As of the end of June, the machinery industry has established and approved the construction of 260 innovation platforms, including 130 engineering research centers, 121 key laboratories, and 9 innovation centers. It has basically formed an industry technology innovation system with enterprises as the main body, supported by research institutes and universities, with a wide radiation range, strong research strength, and complete functions. The construction of an innovation system has effectively supported innovative development, and highlights in the research and development of major national heavy equipment have emerged frequently. The world's largest tower crane with a rated lifting torque of 20000 tons has been launched and will be used for the construction of the world's largest span three tower cable-stayed bridge - the Ma'anshan dual-use Yangtze River Bridge project. Successfully developed the world's first 12000 meter deep well automated drilling rig with fully independent intellectual property rights, providing solid equipment support for challenging the limits of deep earth and developing ultra deep oil and gas resources. Successfully developed the world's first outdoor intelligent 50000Kva/110Kv on load dry-type transformer with the largest capacity, which is cleaner than oil immersed transformers and meets the environmental requirements of water source projects. Successfully developed the world's first 3000 ton OMB multi nozzle opposed pulverized coal pressurized gasification furnace, achieving a historic breakthrough in key core technologies and equipment in the coal chemical industry.
5. Continuous improvement of industrial basic capabilities and modernization level of industrial chain
Focusing on the shortcomings and targeting the bottlenecks and breakpoints in the industrial chain, the machinery industry has increased its research and development efforts, improved its basic capabilities, and made new progress in consolidating and stabilizing the chain. The first 300 MW pumped storage unit in China, installed in Unit 7 of the Guangzhou Pumped Storage Power Station, has a "chip level" autonomous controllable excitation system and governor system that operate stably, effectively enhancing the competitiveness and safety of China's pumped storage industry and supply chain. The world's largest self-developed 20MW semi direct drive permanent magnet wind turbine has been successfully produced, marking a new level of independent research and development capability for high-power offshore wind turbines in China. The world's first successfully developed ammonia hydrogen fusion composite power fuel supply system was successfully ignited in the FAW Jiefang liquid ammonia direct injection zero carbon internal combustion engine, marking significant progress in China's research and development of commercial vehicle ammonia hydrogen fusion internal combustion engines. The successful production of the first 150 MW large-scale impulse turbine runner in China marks a significant breakthrough in the development of the core components of impulse turbines from scratch.
2、 Difficulties and problems faced in the operation of the industry
The indicators of rapid growth have boosted industry confidence, but according to customers, the low comparison base of the previous year is one of the reasons for the high main indicators of the machinery industry in the second quarter. From the perspective of the two-year average growth rate, the operating revenue and total profit growth rate of the machinery industry in the first half of the year were 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; In absolute terms, the monthly average completion of operating revenue and total profit in the first half of the year was lower than the monthly average level of the whole year last year. The current operation of the machinery industry still faces multiple risks and challenges from both internal and external sources, and there is still pressure for the industry to operate smoothly.
（1） Domestic market recovery falls short of expectations
In the first half of the year, China's economic recovery showed a wave like development and tortuous progress, with domestic demand recovery falling short of expectations and a sluggish mechanical product market. Since April, the manufacturing PMI new orders index has been below the critical value for four consecutive months. Mechanical enterprises often face a shortage of orders and short orders. A recent special survey shows that 60% of enterprises have reported insufficient orders, an increase of 6 percentage points from the end of the first quarter; 34% of companies have orders in hand that only meet production needs for the past month, 48% of companies meet production needs for the third quarter of this year, and some signed projects have been delayed in execution. The comprehensive and effective recovery of the market may require a certain period of repair.
（2） The pressure to maintain foreign trade growth is increasing
Affected by multiple factors such as the global supply chain repair leading to trade pressure and the slowdown in the recovery of developed economies, downward pressure on the external demand market is gradually emerging. In the past three months, the export value of the machinery industry's foreign trade has continued to decline month on month. In June, 13 branches out of 14 sub sectors in the machinery industry experienced a month on month decline in exports. The automotive industry, which had performed well in the previous period, saw a 12.3% decrease in export value compared to the previous month. The heavy mining, machinery basic components, robots, and intelligent manufacturing industries also showed double-digit declines in export value compared to the previous month; Especially in the mechanical industry, the export value for the month saw its first year-on-year decline since the beginning of the year. From the perspective of trading partners, the export of machinery industry to the three major trading partners of the United States, Russia, and Germany all decreased month on month in June, with a decrease of 11.8%, 2.7%, and 5.3% respectively. At the same time, due to the impact of the Federal Reserve's interest rate hike, emerging markets and developing countries are facing a shortage of foreign exchange reserves, resulting in difficulties for users to make foreign exchange payments, and a decrease in new orders from countries such as Africa and South America. A recent special survey shows that 55% of companies have overseas orders that only meet production needs for the past month, and 30% of companies meet production needs for the third quarter of this year; The number of enterprises expected to see a year-on-year decline in their annual export volume has increased from 22% at the end of the first quarter to 28%.
（3） The problem of difficult account collection still troubles the entire industry
As of the end of June, the total accounts receivable of the machinery industry was 7.7 trillion yuan, a year-on-year increase of 19.7%, which was 9 percentage points higher than the national industrial accounts receivable growth rate during the same period and accounted for more than one-third of the total industrial accounts receivable in China; The average collection period for accounts receivable in the machinery industry is 96 days, which is 7.3 days higher than the same period last year and 32.8 days higher than the national industrial average of 63.2 days during the same period. The results of the special investigation show that 56% of enterprises had an increase in accounts receivable in the first half of the year, while 24% of enterprises remained unchanged; 48% of companies reported a year-on-year increase in overdue amounts in their accounts receivable.
（4） Some industries face significant downward pressure
Under high growth rates, there is a clear differentiation in the operation of some industries within the machinery industry, and some industries are facing significant downward pressure. The agricultural machinery industry switched emission standards and cleared related products at the end of last year. After a brief inventory replenishment cycle at the beginning of this year, production has significantly slowed down. In the first half of the year, 7 out of 10 key monitored products experienced a decrease in production, with industry revenue decreasing by 10.7% year-on-year and total profit decreasing by 12%. The basic components such as bearings, fasteners, and industrial chains, which are widely used, are mainly matched with fuel vehicles. With the rapid development of new energy vehicles, the proportion of traditional fuel vehicles has declined. In the first half of the year, traditional fuel vehicles accounted for 71.4% of the total automobile production, a decrease of 6.6 percentage points from the same period last year, putting pressure on supporting enterprises in the original industrial chain. In the first half of the year, the operating revenue of the mechanical basic components industry decreased by 1.6% year-on-year, and the added value of the general equipment manufacturing industry, which belongs to it, turned from positive to negative in June, a year-on-year decrease of 0.2%. The decline may continue to expand in the second half of the year.
3、 Prediction of the Annual Operating Trend of the Machinery Industry
With the overall recovery of the demand market and the support of various national policies, the machinery industry operated steadily in the first half of the year, laying a solid foundation for achieving the expected annual goals. Looking ahead to the second half of the year, factors favorable to the operation and development of the machinery industry are gradually being released. Firstly, macroeconomic policy regulation has been strengthened, with a series of policy measures recently introduced to promote consumption, stabilize investment, and improve the business environment. The combination of existing and incremental policies will effectively improve the development environment, enhance market confidence, and further unleash market potential, playing a positive driving role in promoting sustained economic recovery and improvement. Secondly, with the further construction of major projects and key projects in the 14th Five Year Plan, the acceleration of infrastructure construction, the emergence of real estate construction from the bottom, and the acceleration of the transformation of traditional industries towards high-end, intelligent, and green industries, the demand market is expected to accelerate its recovery.
However, it should be noted that there is still pressure for the machinery industry to achieve stable operation in the second half of the year. On the one hand, the risk of global economic recession is increasing, inflation expectations are continuing, and geopolitical conflicts are escalating, threatening the recovery of global trade. Developed economies are increasingly demanding diversified supply chains, and the game between major powers is intensifying in key areas. On the other hand, although the triple pressure on the domestic market has been alleviated, it still faces multiple tests such as weak endogenous driving force, sluggish demand, and new obstacles to economic transformation.
Based on comprehensive analysis, the economic operation of the machinery industry will maintain a stable growth trend in the second half of the year. With the increase of the comparison base, the growth rate of major indicators will gradually slow down. The growth rate of industrial added value, operating income, total profit and other indicators for the whole year will be around 5%, and the import and export of foreign trade will be basically stable.
This year is a crucial year for implementing the 14th Five Year Plan, carrying forward the past and ushering in the future. The external environment is complex and severe, and the domestic economy is facing new difficulties and challenges. The entire machinery industry will resolutely implement the decisions and deployments of the Central Committee of the Communist Party of China and the State Council, boost confidence, make efforts, promote the high-end, intelligent, and green development of the industry, solidly promote the construction of a new industrialization and modern industrial system, forge ahead with a new spirit and new outlook, and contribute to the new era, making new and greater contributions to the successful completion of the "14th Five Year Plan" goals and achieving high-quality development of the machinery industry!
Information source: Jijingwang
