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Forecast and Analysis of China Construction Machinery Industry Scale in the Next Five Years |
Public date:2018-3-17 Hits：7765 |
The construction machinery industry reached its peak in 2011. In recent years, due to the slowdown in macroeconomic growth and the downturn in the downstream sectors, the traditional construction machinery industry, which is closely related to the macro economy, has been generally indulged. The main products include excavators, loaders, and bulldozers. Sales continued to decline.
However, since May 16th, sales of major types of construction machinery such as excavators, bulldozers and other single-month sales have increased substantially year-on-year for six consecutive months:
1) In October 16th, excavators, bulldozers and loaders achieved sales of 5,816 sets, 257 sets and 7,826 sets respectively, which represented a year-on-year growth rate of 71%, 179% and 86% respectively;
2) From January to October of the same year, excavators, bulldozers, and loaders achieved sales of 576.46 million units, 2,314 units, and 53,591 units, respectively, representing year-on-year growth rates of 17%, 5%, and 38%, respectively.
The relative improvement of the situation at both ends of supply and demand is the main reason for the bottoming out of the construction machinery industry in the past 16 years:
1) Supply side: Relatively speaking, one of the characteristics of the construction machinery industry is that the supply is relatively flexible. After the industry peaked in 2011, it faced serious overcapacity. As the industry continued to decline, the construction machinery industry gradually started to remove the capacity.
2) Demand side: The improvement from the demand side is the main reason for the rebound of the construction machinery industry. In the past 16 years, the real estate market rebounded and superimposed infrastructure investment to maintain a relatively high growth rate, which has driven the bottom of construction machinery industry demand to pick up.
Demand-side factors will become the biggest cause of the sustainability of the weak recovery of the construction machinery industry.
The intensive introduction of regulatory policies and weak property investment will weaken the role of the recovery of construction machinery. The real estate warming in 16 years has become an important driving factor for the recovery of the construction machinery industry. According to the data, the cumulative year-on-year growth of the newly-started housing area and completed area from negative to positive has increased by 14% and 29% respectively since February of the year. However, after the third quarter, the growth rate of newly started and completed areas gradually narrowed, and the accumulated YoY growth rate from January to October fell to 8% and 7%.
Mainly due to three reasons, real estate in the year 17 may not be able to make a big improvement, thereby weakening the role of promoting the recovery of construction machinery:
1) The intensive introduction of real estate control policies, with the gradually tightening effects of policy tightening, the fall in real estate sales has become a high-probability event, and the transmission of sales to investment will face greater pressure, which will suppress new start-up of real estate and investment growth;
2) Affected by the rebound in sales in 16 years, real estate inventory pressure has eased in the short term, but the area for sale of commercial housing is still at a historically high level, and medium- and long-term inventory pressure remains severe.
Reverse-cycle infrastructure investment boosted the weak recovery of construction machinery is expected to continue. Infrastructure investment is essentially an exogenous, government-led, camera-selective fiscal policy instrument to regulate demand and stabilize economic fluctuations. It has obvious counter-cyclicality: When the economy goes down, infrastructure is introduced to stimulate the decline in demand for hedging and the economy is overheated. , cut infrastructure investment to prevent bubbles. According to the data on infrastructure investment and GDP since 2004, most of the time, the trend of infrastructure investment and GDP deviated, especially in the period of large fluctuations in GDP growth, typical of the 4 trillion investment during the economic crisis in 2009.
Under the "L" type economic background, infrastructure investment has once again become an important means to maintain economic stability. The year-on-year cumulative growth in the amount of infrastructure investment completed in 13 years has kept above 15%, of which, cumulative growth rate in October of 16 years ago was 18% year-on-year. We believe that under the background of the revaluation of the “L”-type economy and the new real estate market will fall back next year, infrastructure investment will play a more important role in the steady growth measures, and it is expected to maintain a higher growth rate, which will offset the decline in property prices to some extent. The impact will help sustain the weak recovery of construction machinery.
The policy exerts force on PPP to help infrastructure investment maintain a relatively high growth rate. In recent years, the government has vigorously promoted the PPP model. The National Development and Reform Commission has issued three batches of PPP promotion projects, involving a total investment of 6.37 trillion yuan and a total of 3,764 projects. Among them, the total investment of PPP demonstration projects amounts to 2 trillion yuan and the number of projects is 744. As the National Development and Reform Commission and the Ministry of Finance work together to promote PPP, the PPP project will be expected to promote infrastructure investment to maintain a higher growth rate, helping the recovery of downstream construction machinery industry demand.
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