China's building equipment trade welcomes sturdy gross sales in 2020, however the outlook is unsure

© Reuters. Wang Min, chairman of XCMG Construction Machinery, speaks during an interview with Reuters at Bauma China in Shanghai

From Brenda Goh

SHANGHAI (Reuters) – China's heavy construction equipment sales are expected to continue at least until early next year, but could be hampered by a slowdown in recent infrastructure investments in Beijing, industry executives said.

Construction machinery manufacturers saw unexpectedly robust sales in China this year, particularly excavators, after the country re-built a new construction to prop up the economy following the emergence of the COVID-19 pandemic.

XCMG Construction Machinery told Reuters that sales in China were up over 20% this year compared to 2019, despite overseas sales being affected by the global spread of the virus.

Competitors like Japan's Komatsu (OTC 🙂 have also seen a recovery in demand from China.

"Our original projections were not for such rapid growth, especially since it is the final year of China's 13th Five-Year Plan," said Wang Min, chairman of the XCMG, in an interview on the sidelines of the biennial Bauma China exhibition. Traditionally, fewer new construction projects start in the industry in such a year.

China's 14th five-year economic plan will be unveiled at the annual parliamentary session in early 2021, with a focus on technology and domestic demand.

Overall, the industry is expected to see sales jump 15% or more this year from last year, according to consulting firm Off-Highway Research, which previously forecast an 8% decline in sales prior to the COVID-19 outbreak.

"We'll definitely see growth in the first half of next year, but in the second half, if expectations will change, we'll have to see what policy decisions the National People's Congress makes," said Shi Yang, research director of Off-Highway Parliament of the country. The consulting company is currently forecasting a decline in sales of 10% for 2021.

Rosy sales in China wouldn't necessarily have resulted in leaps in profits for device makers as more and more gamers join an ongoing price war, he added.

Based in the USA Caterpillar Inc (NYSE :), the world's largest equipment maker, unveiled a new line of cheaper 20-ton hydraulic excavators "GX" for the Chinese market at the show, which, according to dealers, was advertised by dealers for only 666,000 yuan ($ 101,000) . In general, Caterpillar excavators sell for around 1 million yuan.

A Caterpillar spokeswoman said the new series allowed her to offer equipment at a lower price and at a lower cost per hour.

"The competition in China is very fierce, the prices of some standard products have fallen to a level where they can no longer really go down," said Wang of XCMG.

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