News Release by China Machine Tool & Tool Builders’ Association at IMTS2016
News Release by China Machine Tool& Tool Builders’ Association at IMTS2016
ChenHuiren
Presidentof CMTBA
Distinguished guests, ladies, gentlemenand friends;
Good morning!
First of all, on behalf of ChinaMachine Tool & Tool Builders’ Association, I’d like to extend my warmwelcome and heartfelt thanks to you all!
I’m going to introduce thefollowing contents to you at this news briefing:
1. The new situation of China’seconomy;
2.The new change of the consumption market of China machine tool & toolindustry;
3. Thepreparation of The 15th China International Machine Tool Show(CIMT2017).
a. Theposition of China’s economy in global economy
As is known to all, China has been the secondlargest economy in the world since 2009 and China's GDP has been over USD10trillion for more than two years. According to the statistics from the WorldBank, China's total GDP in 2015 expanded by 6.9% and reached USD10.9 trillion,about 60% of the U.S. one, whose GDPincreased by 2.43%. Meanwhile, it was 2.7 times of the third largest economy ofJapan (whose growth rate was 0.47%), 3.2 times of the fourth largest economy ofGermany (whose growth rate was 1.69%) and 5.2 times of India's economy (whosegrowth rate was 7.57%). As the largest foreign trade country, China’s totalvalue of foreign trade of both import and export in 2015 registered USD 3.96trillion, accounting for 11.9% of the world's total. With the lackluster globaltrade in the first half of 2016, the exports of world most major economies had suffered adouble-digit percentage drop, while there was a minor decrease of 7.8 percentto the exports of China and the share in the quantum of world trade was “ notdrop but up”. The above macro data revealed that China has firmly maintained onthe step of the world second largest economy, becoming an important and indispensablepart in the global trade and economy. Despite the slower growth of economy,China remains a major engine to world economy for its huge economic size and highgrowth rate.
b. The operation status of Chinese economy
Influenced by the global financial crisis inthe year of 2008, China’s economy is experiencing the twinge of structural adjustment.Especially under those comprehensive action of factors: the slow recovery ofworld economy, decreasing price in staple commodities, prominent internalstructural contradictions, increasing component cost, aging of population andthe like, China’s economic development enters into the period of “new normal”. Theexternal prominent of China’s economy “new normal” is that the economic growthis changed from high speed into the interval of medium-high speed, fixed assetsinvestment is continued to drop, and consumption replaces investment becomingthe biggest factor to contribute to the growth of GDP. The internal factor isto urgently push structural adjustment of developing kinetic energy switchoverand mode updating.
Withthe continued downward in economic growth in recent years, the growth of China’sindustrial economy also follows the trend. The growth of industrial added valuereached 6.1% in 2015, a decrease of 9.6 percent compared to that of 2010. Alongwith the rolling out of various measures of “ stabilizing growth, adjustingstructure” from Chinese government, the industrial economy appeared to be slowin its downturn in the first half of 2016, the effect of structural adjustmentbegan to be loomed. The industrial added value from January to June 2016 saw ayear-on-year growth of 6 percent. Seeing from quarterly growth, the growth ofindustrial added value was fluctuated slightly around 6 percent from the thirdquarter of 2015 to the second quarter of 2016, the industrial growth trended tobe stable. By categories, the mining sector grew by 0.1 percent in the firstsix months of 2016, much lower than the industrial growth rate. In dealing withsectors with serious overcapacity, raw coal production reduced by ayear-on-year 9.7 percent, crude steel production lowered by 1.1 percent and electrolyticaluminum output decreased by 1.9 percent. By contrast, the industrial added value of strategic emerging sectorsincluding new energy automobile, energy conservation & environmentalprotection sector, new generation IT technology, new energy industry and newmaterial industry experienced a year-on-year growth of 11 percent. In general,the performance of Chinese economy and industrial operation is stable, and its fluctuationis mainly reflected as absorptive reactions of switchover for the new & oldkinetic energy and impact from structural upgrade to economic operation.
c. Themajor factors influencing future Chinese economy
At the end of 2015, Chinese government putforward the strategic direction for supply-side structural reform in line withthe new characteristic of economic development and change. After that, it madeclear further to put forth effort to implement “3-gone, 1-reduce, 1-supplement”to realize supply-side structural reform, and 5 major tasks, namely, de-overcapacity,de-stock, de-leverage, reducing costs and supplement of the lack. The maincontents are: de-overcapacity means to deal with overcapacity and disposezombie enterprises; de-stock means to handle the stock of urban real estate inthe third-tie and fourth-tie cities; de-leverage is to reduce enterprises’ debtratio and leverage level; reducing cost means to bring down institutionaltransaction cost and enterprises’ unreasonable burden; to supplement the lackmeans to do it by reinforcing the investment to promote structural adjustment.On July 23, 2016, at the 26th meeting of the leading group of China centralcomprehensive deepening reform, Chinese President Xi Jinping stressed that “ensuringthe confirmed reform direction won’t be not in deviation and making sure thereform task won’t be failed." Therefore, the mentioned direction and task willbe the key inner factors to affect Chinese economy and operational trend onChinese machine tool consumption market as well as its industry for a time infuture.
Meanwhile, steady progress has been madein the internationalization, such as the new-round market-based RMB exchangerate regime initiated in August 2015 accelerating the pace ofinternationalization of RMB. The steady strategic implement of the “Belt andRoad” initiative and “Going Global”, the acceleration of China’s investingabroad has prompted the deep and frequent interactions among domestic industry,international market and industrial chain. China is pushing the negotiation andimplementation for several unilateral and multiple free trade agreements, China’smarket will become more opening-up.
"China remains the biggest developingcountry in the world, the largest manufacturing country, a major trading nationin goods and services. It is also the world's second largest consumer marketand a major emerging market with the biggest growth potential. “Said Chinesepremier Li Keqiang, at Summer Davos Forum in Tianjin in 2016.”We are optimisticabout the current state and future prospect of the Chinese economy."
a.The overall situation
As noted above, given the slowdownin economy and investment growth and the demand structure upgrading, the totalscale of China machine tool & tool consumption market is on the stage ofslowdown. Following is the introduction to the changing situation inconsumption, production and import of both metalworking machine tool and toolsectors.
There had been three stages of slowdownin China metalworking machine consumption value from the peak of 2011 to 2015.2011-2012 marked a relatively high stage at USD39.09 billion and USD38.28billion. The second stage of 2013-2014 saw a sharp drop at USD31.91 billion andUSD31.83 billion respectivly. Since 2015 till now comes aminor decrease, while the total consumption of machine tool reached USD27.5billion in 2015 and USD12.9 billion in the first half of 2016 with ayear-on-year decrease of 9.2%. The change of production trend and consumptionvalue of metalworking machine tool is more or less the same , appearingbasically three descending stages synchronizedwith consumption value. The production of metalworking machine tool in thefirst half of 2016 yielded USD10.4 billion, a year-on-year negative growth of 8.8%.Though the imports of metalworking machine tool also went down, the three stage was not obvious, duemainly to the gradual slowdown in the imports at later period. The metalworkingmachine tool imports in the first half of 2016 yielded USD4 billion, down 6.1%over the first half of 2015.
After China tool consumptionmarket experienced a slow "turtle's back type" growth, a significantdecline came in 2015. The consumption value of tools in 2015 declined to USD4.5billion, down 12.1% on a year-on-year basis. And the consumption value of toolsin the first half of 2016 was USD1.9 billion, down 20.8% over the first half of2015. Of which, the operational trend of China tool production and itsconsumption value was basically in synchronization. The main reason of significantdecline was the sharply shrinking demand in low-end cutting tools. The importvalue of tools was no big change, it was USD700 million in the first half of2016, a decrease of 6.2% over the first half of 2015. It related to the fieldof imported tools facing medium-high-end and the demand of them maintainedrelatively stable.
Despite the significant slowdown,China remains the largest consumption market of machine tool & tool in theworld, holding an important position. According to the data on global machinetool consumption and trade ( by "Gardner Business Media"), the consumptionvalue of China machine tool in 2015 ranked the first, accounting for 34.8% ofthe global consumption, 3.7 times as that of the United States, the secondlargest machine tool market. The total import value of machine tool by China in2015 had taken the first place in the world, accounting for 20.6% of the globalone. It is 1.9 times as that of the second one, the United States. According to the estimationof the relevant data in the first half of this year, the decline of consumptionvalue of China machine tool in 2016 will see a further narrow and China will stillremain the first position of the largest market.
b. Structural change becoming obvious
Therecent prominent characteristic of China machine tool & tool consumptionmarket and industry is that their structural change becomes obvious. Thefollowing is the 2-aspect analysis of structural change from the fields ofsubdivision and imports.
Emergingmarket demand was rapidly rising while the demand from traditional industriesremained stagnant. Through analysis on data of investment in fixed assets byChina National Bureau of Statistics, 30 subdivision fields in Chinamanufacturing industry in the first half of 2016, the speed-up in investmentaccounted for 66.7% and the decrease in investment accounted for 33.3%. Data atthe end of 2015 were 86.7% and 13.3% respectively. Seeing from speed-up, thefields of subdivision with 2-digital growth in investment in the first half of2016 were cultural & education, sports & recreational equipment manufacturingindustry(17.1%), food manufacturing industry (15.9%), textile industry (12.9),electric machinery & apparatus manufacturing industry (12.3%) andpharmaceutical manufacturing industry (11.7%). The fields of subdivision with 2-digital decrease in investment in thefirst half of 2016 were metalwork, machinery and equipment (-34.9%), tobaccoindustry (-17.7) and transportation equipment manufacturing industry (-11%).Seeing from the investment value, the top 3 places were nonmetal mineralproduct (USD113.1 billion), chemical product (USD99.9 billion) and generalequipment (USD90.2 billion). The last 3 places were tobacco industry (USD1.3billion), metalwork, machinery & equipment repairing (USD1.9 billion) andchemical fiber (USD8.1 billion).
Thepace of the downturn in the Metal cutting machine tools slowed, with the metalforming machine tools still on the descending trend. No matter on the market consumptionvalue or production data, the decline in metal cutting machine tools isnarrowed recently. In the first half of2016, the consumption value of metal cutting machine tool reached USD8.3billion, a year-on-year decrease of 3.5%, an increase of 10.9 percent in thegrowth rate compared to that at the end of 2015. The consumption value of metalforming machine tool was USD4.6 billion, a year-on-year fall of17.9%, adecrease of 5.6 percent point in the growth rate compared to that at the end of2015. In recent years, the structure upgrade of China's machine toolconsumption market has been speeding up, featured by the sharp decline in thedemand for non CNC metal cutting machine tools. With an earlier start inadjustment in the subdivision field of metal cutting machine tool, theadjustment carried out comparatively sufficiently, the proportion of CNCproducts in metal cutting machine tools is on the rise. So it begins to beadapted to the structure of current market demand. In contrast, the adjustmentof subdivision field of metal forming machine tool has just started the rapiddecline in the demand for non CNC metal forming machine tools is bound to bringthe market to downturn.
Thefalling demand for low-end tools further reflects the operation in low-end manufacturing industry at lower capacity. Inthe first half of 2016, in terms of subdivision imported cutting tools, carbideblade increased by 2.8% over the year before and ordinary turning tools fell by10.9% on yearly basis; carbide boring cutter grew a year-on-year 12.9% and ordinaryboring cutter dropped by 13.1%compared with the same time last year; carbidedrill decreased by 1.4% from last year, and ordinary drill saw a year-on-yeardecrease of 9%. From 2015 till now, there has been a significant decline around30% in the sales of high-speed-steel cutting tools represented by drill, turningtool, milling cutter, etc., which echoes the slowdown in non CNC machine toolsales and application. As tool consumption reflects the operating rate of themanufacturing industry, the consumption of tools structural changes indirectly reflectedthe structural changes of equipment application in manufacturing industry.
Thesource of importation has changed. In the first half of 2016, the top five sourcesof metalworking machine tools imported were respectively: Japan (USD1.19billion, an annually fell of 9.6% and taking 30% share of the total importation),Germany (USD1.08 billion, up 4.8% from the year earlier and taking 27.1% share),Taiwan (USD420 million, down 17.4% from 2015, taking 10.5% share), South Korea(USD290 million, a year-on-year decrease of 17.3%, and taking 7.2% share) and Switzerland(USD220 million, down 0.2% from 2015 and taking 5.6% share). The top five sourcesto import cutting tools by China in the first half of 2016 were respectively:Japan (USD190 million, 6.7% less thanthat of 2015 and taking 29.4% share of Chinese total imports of metal cutting tools),Germany (USD120 million, down 18.9% from 2015 and taking 19.5% share), Sweden (USD60million, up 24.7% over 2015 and taking 10.2%share), Taiwan region (USD60 million,down 5.4% from last year and taking 9.9%share) and South Korea (USD50 million,up 9.9% over the year before and taking 8.3% share).
Thestructure of importation has been changed. The top three metal cutting machinetools imported in the first half of 2016 were respectively: processing center (USD1.5billion, down 7.3% from 2015 and taking 45.9% share of the total imports ofmetal cutting machines), grinding machine (USD550 million, up 9.2% over 2015and taking 16.8% share), and non-traditional machine tool (USD420 million, down10.2% from 2015 and taking 12.8% share).The top three metal forming machinetools imported in the first half of 2016 were respectively: punch, shear andbending machines (USD310 million, down 3.9% from 2015 and taking 43.7% share ofthe total imports of metal forming machines), forging machine (USD190 million,down 24.1% from last year and taking 26.8% share) and presses machine (USD100 million,down 38.8% from 2015 and taking 14.1% share). In the first half of 2016, thetop three cutting tools imported were respectively: carbide blade (UDS280 million,up 2.8% over 2015 and taking 40% share), drilling and tapping tool (USD130 million,down 11.7% from 2015 and taking 18.6% share) and milling blade (USD90 million, down6% from 2015 and taking 12.9% share).
c. New Challenges and Opportunities
Withthe downward trend in Chinese machine tool consumer market, there’s always somepeople who concern China’s economy and market put forward the doubt that"Whether the engine of China machine tool & tool consumption marketshut down or not?" .To answer this question is far more complex than toraise it and need more prudent attitude and deep analysis. The major point isthat the current China’s economic dimension is huge and the degree of marketopening-up is the highest in history involving intricate factors of politics,economy, regional development, population, cultural habit, resources & environment,industry system, capital and international relations and the like. It’s farincomparable by other countries with small-medium economic dimension andneither to be analyzed clearly by economic theory & model from anyschool. The following will be an analysis on future challengesand opportunities likely facing China's machine tool consumption market on thebasis of current development status and government policy guidelines.
It’sclearly indicated in the analysis of China’s current economic operation, due tothe switchover of new and old kinetic energy and impact of structural upgradingof the economic development leading to the current economic slowdown in recentyears. Products of machine tool & tool are of means of production and noone can immune from it and surely to be effected directly or indirectly duringthe change of industrial demand and structural adjustment & upgrading fromdomestic users. The heavy machine toolmanufacturing industry declined drastically due to the changing demand in thefields of energy and iron & steel in the recent years is a typical example.It can be said that the maladjustment to the changes of market demand and howto adapt to the new market demand are the new challenges facing China machinetool & tool consumption market.
As an old saying goes "Outwith the old, in with the new", these new challenges offer more new opportunitiesas well in terms of China's industrialization and consumption potential. Firstof all, China’s industrialization has not achieved yet but with huge upsidepotential though many basic links and equipment conditions are still weak. Ahandful of fields in China industry are at "industry 4.0" stage, withthe majority on the early stage of "industry 3.0", and some certainindustry or enterprises still on "industry 2.0" stage by comparisonwith “industry 4.0” to divide the industrial development progress. It’s understandablethat why 1/3 share in consumption structure of China’s market are non CNCmachine tool products for over 10 years. The unbalanced development ofindustrialization indicates the stable consumption demand for future machinetool & tool. Probably, the quantum has not reached the historic record butits added value is bound to be higher than before.
Then, China is NO.1 manufacturing power withcomplete industrial system possessing numerous skillful labors in the world. Thoseadvantages will be conducive to China’s manufacturing industry to serve bothdomestic and international markets in the future. As China is entering thestage of aging population, a downward trend in the quality and quantity oflabor is happening. The requirement for manufacturing equipment in the futurewill be constant rise in the aspects of high efficient, automation andintelligence in order to compensate for the shortage of labor and the rising costs.Some low-end machine tools stocked in last few years during the investment rapidlygrowing will be anticipate eliminated or transformed rather than waiting theirlifecycle. We estimate that thoserequirements will have an explosive growth to some extent, along with thestructural rationalization of the labor force. Lastly, theenvironmental protection of energy saving will be matched with China’s economicgrowth and the rise of China’s international status. The upgrade of consumptionlevel in machine tool & tool will be brought by the development ofstrategic emerging industry. Manufacturing solutions needed in complicatedconditions of high-efficiency, high-performance and automaton are used in thosemanufacturing fields such as medical treatment, aerospace, energy, defense,transportation, electronic information, etc. The sustainable development ofChina’s economy and manufacturing industry will be realized at more excellentproductivity of unit energy consumption.
Asthe saying goes, boiling frog died but those who fall into the river may not drown.Proactive changes in the Chinese market offers a broad development space andgreat opportunities for global growth and innovation oriented machine tool manufacturers, thus the challengewill turn out to be a trophy of success.
Toconclude, we have reason to be full confidence in the long-term development ofChina machine tool consumption market.
ChinaInternational Machine Tool Show (CIMT) sponsored by China Machine Tool &Tool Builders’ Association (CMTBA) and founded in 1989 is a grand machine toolgathering and enjoys very high degree of internationalization. CIMT, EMO, IMTSand JIMTOF are the four major international machine tool exhibitions in theworld. After 14 successful sessions, CIMT2017 will be held in April 17-22, 2017in Beijing.
Withthe backdrop of transformation and upgrading of China machine tool industry andglobal economic downturn, last session of CIMT2015 registered historical high inexhibiting area of 131,000 square meters, of which both domestic and overseasexhibitors take 50% exhibition space each. CIMT2015 attracted 1,554 exhibitorsfrom 28 countries and regions, well-established companies all included. In 6-dayexhibition period there were over 315,000 high quality trade visitors visited theevent. Exhibits at CIMT2015 mainly embodied the latest development ofstate-of-art technology in high-precision, highly-efficient, composite,intelligent and eco-friendly.
Therefreshment of CIMT2017 with its theme of "New Demand · New Supply · New Momentum" will conduct a series of activities ofinformation publishing, product promoting, technical exchange, commerce andtrade connecting, etc. embracing the said theme to support exhibitors.
Theorganizer, China Machine Tool & Tool Builders’ Association (CMTBA) will continueto strive for an upgraded CIMT show for the benefits of domestic andinternational exhibitors and visitors. In the 131,000 m2 exhibiting area, there will be professionallayout for forming and laser processing machine tool, 3D print, industrialrobots, accessories and cutting tools, etc. Both domestic and international exhibitsin the above fields will compete at the same exhibition area for the benefitsof the trade visitors and buyers. Besidesthe major efforts to professionalization, great efforts have been made for the informationizationplatform. To highlight the advancement and representativeness of internationalexhibitors while ensuring the internationalization background, CMTBA endeavorsto enrich and elevate all activities at the show. Through the above effortsCIMT2017 will be forged an exhibition with professionalization,informationization, platform of international exchange and interaction to offerall-round service for exhibitors, visitors and media.
Welcomeexhibitors and visitors from all over the world to CIMT2017. Let’s marchtowards new future with the help of the platform of display and exchange at CIMT2017!
China Machine Tool & ToolBuilders’ Association
September 2016
