Three major policies affect the demand for construction machinery industry

During the 12th Five-Year Plan period, the steady and progressive China economy will provide an important and continuous driving force for the development of the construction machinery industry. Benefiting from this, combined with the continuous improvement of the company’s innovation ability and comprehensive competitiveness, China’s construction machinery industry will continue to operate at a high level. Liu Zheng, analyst of the machinery industry group of Xiangcai Securities Research Institute, believes that there are three major policy drivers affecting the needs of the construction machinery industry:

First, affordable housing projects are one of the important driving forces for the development of the construction machinery industry. In February 2011, the Ministry of Housing and Urban-Rural Development and the provinces, autonomous regions, municipalities directly under the Central Government, and separately listed cities signed the “Responsibility Letter for Guaranteed Housing Objectives,” and it is required to complete the construction of 10 million sets of affordable housing this year. According to the data from the Ministry of Housing and Urban-Rural Development, the scale of affordable housing projects in 2010 reached 5.8 million units and the investment exceeded 800 billion yuan. In 2011, 10 million sets of affordable housing projects were constructed, and new investments exceeded 600 billion yuan. Based on this calculation, the investment in affordable housing projects in 2011 may reach 1.4 trillion yuan.

Second, railway investment will exceed RMB 3 trillion, which is also an important driving force for construction machinery. The “12th Five-Year Plan” of China’s comprehensive transport system shows that during the “Twelfth Five-Year Plan” period, a 40,000-kilometer rapid rail network will be built, and it is expected that the railway investment will reach 3.5 trillion yuan during the “12th Five-Year Plan” period.

In addition, investment in water conservancy construction will have 4 trillion yuan in the next 10 years, which is the third largest driving force for the development of construction machinery industry. Due to the consideration of “three rural issues” development, energy conservation and emission reduction, experts predict that the focus of China's infrastructure investment in fixed assets will shift from railways and highways to water conservancy construction in the next 10 years.