Manufacturing News

How China's excavator sales boom resonates with global recovery

Business has been booming for Chinese excavator makers since the beginning of the year, fueled by surging market demands and signs of economic rebounds both at home and abroad.

In the first quarter, China's 26 leading excavator makers sold a total of 126,941 digging machines, up 85 percent year on year, data from the China Construction Machinery Association showed.

As new orders surged, excavator sales in February hit a record high for the same month to reach 28,305 units, according to the CCMA.

The figure, often regarded as a key barometer of the vitality of an economy, corroborated the country's better-than-expected economic recovery and solid fundamentals.

Business activities in China's manufacturing and service sectors have been picking up pace. The purchasing managers' index for the manufacturing sector came in at 51.9 in March, indicating further expansion from the previous month, data from the National Bureau of Statistics showed.

In its latest World Economic Outlook, the International Monetary Fund on Tuesday projected that the Chinese economy will grow by 8.4 percent in 2021, 0.3 percentage points above its January forecast.

The robust pace of sales reflects strong demands for construction machinery and macroeconomic vitality in the first quarter, according to industry insiders.

"Going into the second quarter, infrastructure growth is expected to rebound, supporting a continued strong economic recovery," said Gao Ruidong, chief macroeconomist at Everbright Securities.

Evergrowing market

According to Su Zimeng, CCMA chairman, the sales boom of excavators can be attributed to China's huge capacity of economic growth and sizeable infrastructure scale.

Under the country's coordinated regional development strategy, the demand for infrastructure construction remains huge with continuous efforts to drive the development of the Beijing-Tianjin-Hebei region, the Yangtze Economic Belt and the Guangdong-Hong Kong-Macao Greater Bay Area.

Official statistics showed that during the January-February period, investment in infrastructure and the manufacturing industry increased by 36.6 percent and 37.3 percent, respectively, year-on-year.

China has also been stepping up policy and fiscal support for new infrastructure, which has been included in the country's 14th Five-Year Plan (2021-2025).

From 5G big data centers to urban rail transit, the presence of construction machinery manufacturers remains crucial, generating sustained growth of China's construction machinery market in the future, according to Su.

"At present, the excavator market is still on the rise, with equal stress on stock update and incremental demand. It can be predicted that high level of prosperity will last for China's construction machinery industry, which will surely continue to grow steadily in the next five years," he said.

Noting that the country experiences a quicker urbanization process and the future trend of replacing human labor with machines, Su said that Chinese construction machinery, represented by excavators, will embrace good development opportunities with their ever-expanding application scenarios.

For example, micro excavators, some of which are narrow and short enough to be driven through doorways, are becoming increasingly popular among Chinese buyers as they can function well in confined spaces and help in smart agriculture.

Going global

While digging into the domestic market, Chinese excavators have been seeking a stronger global presence.

In the first quarter, the country's 26 leading excavator makers exported a total of 13,376 digging machines, surging 81.9 percent year-on-year, CCMA data showed.

In the city of Xuzhou, East China's Jiangsu province, one of the country's top excavator manufacturers, Xuzhou Construction Machinery Group, saw over 200 units of its tailor-made excavators lining up on April 2 to be delivered to Europe, the United States and Australia.

While the global market faces mounting pressure of coronavirus-induced recession, overseas sales of the company's digging machines bucked the downward trend by gaining over 50 percent year-on-year in high-end overseas markets.

Exporting machines to 187 countries and regions, the company reported annual exports of $1.6 billion, with its overseas income accounting for about 30 percent of its total revenue, according to Wang Min, chairman and CEO of XCMG.

With their research and development, production, brand and management system highly internationalized, some enterprises' competitiveness in overseas markets has been improved by leaps and bounds, said Su, noting that China's exports of construction machinery totaled 21 billion dollars in 2020 despite the impact of COVID-19.

The world is also on its way to recovery. Global growth is projected at 6 percent in 2021 in IMF's latest World Economic Outlook, higher than the previous forecast.

"Construction machinery, as a key industry of international production capacity cooperation, will see its vista of internationalization broadened," said Su.

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