Interview: Caterpillar sees "good momentum" in China industry growth

0 Comment(s)Print E-mail Xinhua, August 21, 2018
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JINAN, Aug. 21 (Xinhua) -- U.S. heavy machinery giant Caterpillar Inc. is optimistic about the future growth of China's construction machinery industry as the country maintains a steady economy and advances structural reform.

A cyclical increase of demand in China was a strong driver for Caterpillar's construction equipment sales growth in the second quarter, and there are plenty of factors sustaining a positive outlook for the Chinese industry in the coming two or three years, according to Chen Qihua, vice president of Caterpillar In. and chairman of Caterpillar China.

"Overall, we see a very good momentum of growth for the construction machinery industry [in China]," Chen said in an interview in Qingzhou, Shandong Province.

Though the country's efforts to clean up irregular public-private partnership projects and reduce leverage have contributed to slower infrastructure investment growth, Chen believes infrastructure projects are likely to increase steadily in the future as policymakers aim to prop up the sector as part of the supply-side structural reform.

Solid GDP growth, a proactive fiscal policy, steady expansion of new real estate projects, as well as stable prices of coal and steel will sustain the growth in infrastructure, property and mining sectors, while strong market demand for equipment upgrading will also shore up machinery sales, Chen predicts.

"The current growth of the construction machinery industry is of higher quality and healthier," he said. "The industry's profitability remains sound."

China's fixed-asset investment growth slowed in the first seven months of the year, with infrastructure investment up 5.7 percent year on year, compared with 7.3 percent in the first six months.

However, the construction machinery industry maintained robust growth. For example, excavator sales surged 58.7 percent year on year in January-July, according to the China Construction Machinery Association.

In the long term, China's bid to improve rural and western infrastructure and the Belt and Road Initiative are also positive for the industry's outlook, according to Chen.

He noted continued increases of sales related to Belt and Road infrastructure projects in Asia, Africa, and the Middle East this year.

Caterpillar has three R&D centers and some 20 manufacturing facilities in China. Caterpillar (Qingzhou) Ltd. (CQL), formerly Shandong SEM Machinery Co., Ltd. and acquired by Caterpillar in 2008, marked the 60th anniversary this year.

CQL has become an important manufacturing base for Caterpillar, "demonstrating Caterpillar's long-term investment commitment to China," Chen said when addressing a ceremony celebrating the anniversary.

Frederic Istas, Caterpillar's vice president of the earthmoving division, described the acquisition of CQL as a "win-win," noting that Caterpillar has brought higher quality requirement and skills to SEM but also learned from SEM on how to work with local suppliers and address customer demands.

CQL will continue to increase its production capacity, launch cost-effective products and improve its delivery capabilities in the future, according to Istas. Enditem

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