Analysis of Operating Environment of China Machinery Industry in 2013

Demand environment - domestic demand situation: Demand will pick up slightly, but it cannot be expected to rebound quickly. It is expected that consumption growth in 2013 will be expected to remain stable; investment growth has already begun to pick up, but it is not expected to reproduce the “4 trillion” market that year. Although the growth rate of GDP in 2013 will be slightly higher than that of the previous year, it is still low. Therefore, the increase in domestic demand in 2013 should not be overly optimistic.

According to my sample survey on key contact companies, the cumulative order amount for January-November 2012 decreased by 1.26% year-on-year, still at a very low level, highlighting that the current demand for machinery products is still in a rather sluggish state.

To sum up, we must have enough ideological preparations for the difficult situation in which we need to continue to slack in 2013. However, there are indeed subjective and objective conditions for a moderate rise in demand. Therefore, we should not be blindly optimistic about the situation of domestic demand and should not be overly pessimistic.

Macroeconomic situation: The economic situation began to pick up moderately. GDP growth in 2012 was 8.1% in the first quarter, 7.8% in the second quarter, and 7.7% in the third quarter. In the fourth quarter, there was a slight increase in bottoming out, and the annual increase would be around 7.7%. The electricity consumption in November increased by 7.6% year-on-year, confirming that the economy bottomed out. It is expected that the macro economy will continue to pick up in 2013, but the recovery will be more moderate and GDP will increase by about 8%, slightly higher than the previous year.

——Inflationary pressures began to ease, creating conditions for policy increase flexibility. In October 2012, the CPI fell to a low of 1.7% during the year. In November, the CPI rebounded by 0.3% from October to 2.0%, and the CPI has dropped to “2. In the era, inflationary pressures have slowed down significantly; creating conditions for “steady growth” to increase policy flexibility.

It is expected that the upward pressure on prices will rise in 2013. Some experts believe that the CPI in 2013 may recover from around 2.7% in 2012 to around 3.5%, but there is little risk of a substantial increase.

- External demand situation: total demand will increase, but the rate of increase will further slow down. First, exports have already shown a significant weakening trend in 2012. In terms of national foreign trade, the original target for 2012 was a growth of 10%. In fact, it only increased by 5.8% in January-November. In November, the growth rate of exports has slipped to 2.9%, a sharp drop of 8.7 points from an increase of 11.6% in October. percentage point. It can be seen that the situation is not optimistic.

Second, although China’s machinery industry has a certain degree of international comparative advantage, exports have continued to develop rapidly for many years and have caused increasing trade friction. The difficulty of expanding exports is increasing rapidly. Therefore, the expectation for export growth should be reduced. In addition, the renminbi’s exchange rate against the U.S. dollar has recently regained its upward trend. It rose to an intra-year high of 6.2855 on December 31, 2012, and it has risen to 6.2804 on January 8 this year. The rising exchange rate will inevitably weaken my export competitiveness.

Third, the counterparts of developed countries are not only trying their best to expand the advantages of the high-end equipment market, limiting my development, but also actively extending to the mid-range products and occupying my traditional market. This trend has become more and more obvious in the fields of cars, numerical control systems and machine tools in recent years. This will certainly have a negative impact on the traditional domestic market of domestic companies.

Therefore, we should have a little more awareness of the crisis in the external demand situation in 2013, and on this basis we must step up our preparedness.

In short, it is expected that the demand situation of the machinery industry in 2013 will be slightly better than that of the previous year, but it is still rather severe and must not be overly optimistic.

Supply Environment - Purchasing Costs: Slightly Rising September 2012 PPI increased by -3.6% year-on-year, a 35-month low, a year-on-year increase of -2.8% in November, and -2.2% year-on-year in November; indicating that the real economy is obviously cold However, the decline has continued to narrow, indicating that the economy has started to pick up. Against this backdrop, purchase prices for fuel, power, and transportation have been at a relatively low level for the previous year, and it is expected that the cost of procurement will slowly rise in 2013.

It is worth noting that, despite the current low price of international bulk materials, under the stimulation of loose monetary policies in many countries including the United States and Japan, the prices of upstream resource products may rebound, thus increasing my import inflation. risk.

——Financial Costs: The total amount continues to grow, but the growth trend is slow Under the background of slowing inflation pressure, the financing environment in 2013 is expected to be better than in the previous year, and the state’s control over liquidity will be reduced. However, some mechanical companies will face greater risk of recovery of accounts receivable. It is expected that the financial cost of the industry will continue to increase in 2013, but the growth will slow down.

- Labor costs: Continue to steadily increase the wages of employees. The steady increase in labor costs and the continuous increase in labor costs will become the norm in the future. There should be sober estimates and long-term preparations.

——Inventory's impact on the supply environment: We must look at the inventory of backlogs in circulation. According to the data from the National Bureau of Statistics, in 2012, the industry-wide inventory growth slowed down significantly. Therefore, the pressure of “destocking” in 2013 should not be large, but due to the fact that there are still many products deposited in circulation, it takes a long time to digest, which will not be conducive to normal marketing in 2013.

——Influence of production capacity on the supply environment: Overcapacity expansion is the rapid expansion of production capacity of the largest dangerous machinery industry, which has seriously worsened the market environment. Although total demand has increased year by year, it is still far behind the growth of supply capacity. Vicious competition has become increasingly fierce; especially in recent years, such industries as construction machinery, power transmission and transformation equipment, wind power equipment, and machine tools have been investing in high-speed growth, and the price war will be difficult to ease.

The policy environment The Central Economic Work Conference at the end of last year has made it clear that the keynote of the policy in 2013 is still "stability for progress." However, the basic requirement is to “stabilize growth” and at the same time pay more attention to improving the quality and efficiency of growth, and to achieve “no water” growth. Therefore, it can actually be said to be "smoothing efficiency."

The conference pointed out that in 2013, we will continue to implement "proactive fiscal policies and sound monetary policies", in addition to highlighting "three rural issues", structural adjustment, urbanization, people's livelihood security, and promotion of institutional reforms.

The special interest in the real economy such as the machinery industry is that the central government has made it clear that “monetary policies should appropriately expand the total size of social financing and maintain a modest increase in loans,” and “we must realistically reduce the financing costs for the development of the real economy.”

Industrial Policy: Continuing to benefit the machinery industry To develop the seven strategic emerging industries supported by the “Twelfth Five-Year Plan” countries, the machinery industry has “High-end Equipment Manufacturing” and “New Energy Vehicles,” and other strategic high emerging industries. The development will also stimulate the development of machinery and equipment. With the continued implementation of major special projects such as the “04” special project and nuclear power projects, and the implementation of favorable measures such as the “three basics” plan and the “three agricultures” policy, overall, the policy and public opinion environment are very beneficial to the structural upgrading of the machinery industry.