It also demon­strates that China’s equip­ment prod­ucts are be­com­ing com­pet­i­tive in the global mar­ket.”

China Daily (Canada) - - FRONT PAGE -

The ma­chin­ery sec­tor posted a record trade sur­plus of $79.1 bil­lion last year, lifted by rapidly grow­ing ex­ports from pri­vate man­u­fac­tur­ers, a se­nior of­fi­cial of the China Ma­chin­ery In­dus­try Fed­er­a­tion said onWed­nes­day.

Fac­ing weak do­mes­tic de­mand amid a slow­ing econ­omy, pri­vate ma­chin­ery com­pa­nies looked ac­tively for for­eign cus­tomers, who bought $148.9 bil­lion worth of prod­ucts, up 14.35 per­cent year-on-year, ac­cord­ing to data from the fed­er­a­tion.

The in­dus­try as a whole had ex­ports of $402.3 bil­lion, up 8 per­cent, while im­ports rose 8.2 per­cent to $323.2 bil­lion.

CaiWe­ici, a se­nior ad­viser of the fed­er­a­tion, said that given the se­vere over­ca­pac­ity in the do­mes­tic ma­chin­ery mar­ket, the trade sur­plus is set to ex­pand in the com­ing years.

“It also demon­strates that China’s equip­ment prod­ucts are be­com­ing com­pet­i­tive in the global mar­ket,” he said.

In re­cent years, pri­vate com­pa­nies ac­counted for only about one-third of ma­chin­ery ex­ports, but the pro­por­tion will be more than half very soon, based on cur­rent de­vel­op­ments, Cai said.

How­ever, Chen Bin, head of the fed­er­a­tion, said that although ex­port vol­umes are ex­pand­ing, the prof­itabil­ity of those ex­ports are un­cer­tain be­cause many com­pa­nies are sell­ing abroad at low prices to soak up the out­put ex­cess ca­pac­ity.

Af­fected by the coun­try’s slow­ing eco­nomic growth, the ma­chin­ery in­dus­try is fac­ing chal­lenges, Chen said.

In2014, the sec­tor ex­panded 9.4 per­cent, gen­er­at­ing to­tal rev­enue of 22.2 tril­lion yuan ($3.57 tril­lion), ac­cord­ing to the fed­er­a­tion. The growth rate was 4.4 per­cent­age points lower than the pre­vi­ous year, Chen said.

The in­dus­try had ag­gre­gate prof­its of 1.56 tril­lion yuan last year, up 10.6 per­cent, but the gain was 5 per­cent­age points lower than the pre­vi­ous year.

Chen said that prof­its were af­fected by de­clin­ing prices

of

their and shrink­ing de­mand.

Pri­vate com­pa­nies recorded to­tal rev­enue of 12.7 tril­lion yuan last year, ac­count­ing for 57.3 per­cent of the whole in­dus­try. Their prof­its ex­panded 7.7 per­cent to 757.4 bil­lion yuan.

“The pri­vate sec­tor is gain­ing more im­por­tance in the ma­chin­ery in­dus­try,” Chen said.

He es­ti­mated that the in­dus­try will achieve 8 per­cent growth in sales and 10 per­cent growth in prof­its in 2015 and ex­port growth will be about 6 per­cent.

“The ma­chin­ery in­dus­try is deeply af­fected by the broader econ­omy, which is un­der­go­ing a re­struc­tur­ing process,” he said. “Both the do­mes­tic and over­seas mar­kets will stay weak this year.”

There are also fa­vor­able fac­tors for the in­dus­try.

The Na­tional Devel­op­ment and Re­form Com­mis­sion, the top plan­ning body, has ap­proved nu­mer­ous road, air­port, rail, hy­dropower and grid con­struc­tion projects since Oc­to­ber. Those projects will gen­er­ate de­mand for cer­tain prod­ucts in 2015.

In ad­di­tion, fall­ing prices for such com­modi­ties as crude oil, nat­u­ral gas, iron ore and met­als will lower costs for ma­chin­ery com­pa­nies.

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