Unexpected pickup shows health of economy: insiders
Industry insiders say an unexpected boom in sales of construction machinery is based on economic fundamentals and cyclical features, and the spending binge is expected to last throughout the year, with people currently crowding into a major industry show in Beijing after a chill in the sector for five years.
Thousands of traders and potential buyers flocked to the 2017 Beijing International Construction Machinery Exhibition & Seminar on Wednesday following a strong rise in sales of construction machinery in the first eight months of 2017.
The makers of construction equipment are benefiting from a renewed focus on infrastructure buildup, in both urban and rural areas.
In the excavator market, for instance, manufacturers based in China sold a total of 85,766 units during the first eight months of this year, up 111.1 percent year-on-year, according to data from the China Construction Machinery Association.
They also exported 5,641 excavators during the period, increasing 17.8 percent year-on-year.
Yun Quanbin, owner of Boyu Machinery and Equipment Rental Co based in Zhangjiakou, North China's Hebei Province, told the Global Times that the overall picture has been good this year, creating lots of business for his firm.
"In particular, projects related to the 2022 Winter Olympic Games and the high-speed rail project connecting Beijing and Zhangjiakou have resulted in a lot of earthworks that are keeping us busy. I'd say the market will be rosy for another three to four years," Yun said.
"The sales boom has been a surprise. But it's partly due to the low base of comparison during the same period last year," Li Hongbao, secretary-general of the excavating machinery branch of the China Construction Machinery Association, told the Global Times Wednesday.
Chen Qihua, chairman of Caterpillar China, said the sales boom the market has seen so far this year is based on both fundamental and cyclical factors.
"Five years have passed since the industry saw its last peak in 2012," Chen said. "And the 20 percent annual increase in fixed-assets investment in 2016 and 2017 and a boom in the housing market have created demand, particularly for smaller items of construction equipment such as excavators."
"However, industry players including Caterpillar hold the opinion that this high-growth period won't last for a long time, but there is a basis for sustainable growth," Chen told the Global Times on Wednesday, as the company unveiled three new models.
"We feel that the Chinese economy is stable and its prospects are good, and this will provide fresh support for the industry's sustainable development in the next three years," Chen noted.