Mechanical engineering in China takes off again

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The picture has changed for the machinery and plant manufacturers in China, with business estimates positive again for the first time since autumn 2018. However, travel restrictions remain a major obstacle.

The business situation in China has improved significantly for local machine and plant manufacturers. The VDMA's autumn survey amongst member companies based in China produced a positive assessment for the first time since autumn 2018, with a score of plus 18 points. In the spring survey this value was still minus 12 points. At that time, the corona pandemic had caused a very bad start into the business year 2020. In the meantime, however, the industry is benefiting from the fact that the pandemic has been contained in China. In particular, industrial sectors such as electronics, automotive and mechanical engineering have recovered well after the lockdown of the Chinese economy was cancelled again.

New orders in the machinery and equipment sector have improved significantly compared with the first survey in spring. 24 percent of the companies surveyed report that their current order intake is above the normal range. Only 20 percent stated that orders are below normal. Once again, it can be seen that new orders are increasing significantly, especially within China, while orders from abroad are still lagging behind. Almost all VDMA trade associations in China have reported an improvement in their order books since April 2020. This positive trend seems to remain stable in the coming months. 55 percent of those surveyed expect business to improve in the next six months. 38 percent say that business in China will remain unchanged. Only 7 percent of companies report that their situation will deteriorate.

"China is currently the only major market in the world that is already in recovery. We hope that the situation in China will remain stable even in the wintertime".

Despite this positive development, VDMA members in China are still feeling the effects of the pandemic on their local business. The current travel restrictions are currently being tightened again in China and it remains a great challenge to bring technicians and other experts to China for the projects. However, the competitive pressure from Chinese competitors in mechanical and plant engineering is also increasing.

"China is currently the only significant market in the world that is already in the recovery phase. We hope that the situation in China will remain stable even in the wintertime. But even more importantly, we hope that the other major world markets will also soon recover from the pandemic," sums up Daniel Yoo, Chief Representative of the VDMA in Shanghai.

Results of the latest VDMA survey in the BRIC countries can be found here