How to Relieve Large Deficit in Machine Tools and Other Industries under the Policy of “Promoting the Port”

The data shows that although China's import and export trade surplus in 2010 decreased compared with the previous year, the total amount is still huge, reaching 183.1 billion US dollars. The total surplus of import and export trade of the machinery industry in 2010 was 3.136 billion U.S. dollars, but some major surplus countries have surpluses, but the trade surplus is not small. In 2010, the surplus of the machinery industry to the United States reached 18.7 billion U.S. dollars.

Compared with the policy of using discount interest loans as the core means in 2009, this year's policy adjustment is obviously a step up. Lowering import tariffs, increasing interest-subsidy input, and facilitating import convenience have been identified as the three directions for this year’s package of “promotion” policies.

Although the policy of import encouragement this year has gone one step further than it was two years ago, the industry generally agrees with the purpose of “reducing the surplus”. Wu Bolin, executive vice president of the China Machine Tool & Tooling Industry Association, expressed full understanding of the country’s policy: “Some high-end machine tool products cannot be imported at home and imported from abroad. From this perspective, the import incentive policy has Positive significance."

Another expert from the domestic electrical and electronics industry also expressed the same view: “Import encouragement policies will certainly have emotional stimuli for the machinery industry. And the more incentive policies, the greater the impact on the machinery industry. But objective Judging from the fact that China's foreign exchange reserves are indeed higher, it is necessary to find a way to digest these dollars."

The expert also said that even if these equipment and technologies are not necessarily the most advanced today, they may only be equivalent to the levels of the 1980s and 1990s, but "as long as these equipment and technologies can meet the needs of the current domestic market, they still need to purchase. "At the same time, the expert also pointed out that buying also has the benefit of buying: "After purchasing these equipment and technologies, you can self-digest and inspire the independent innovation of Chinese companies."

Although experts have reached a consensus on the need to “buy,” they are concerned about whether they can “buy what they want”. Wu Berlin told reporters: “Some countries have very strict controls on the export of high-end equipment and technology. Even if China lowers its import tariffs, it will not sell to you.” Therefore, in this sense: “tariffs The increase or decrease is actually not decisive for buying or selling."

The industry’s poor response may be due to the fact that the industry had adapted and precipitated the country's import encouragement policy for two years in 2009. Therefore, when they faced similar policies again in 2011, the response was much calmer.

Summarizing the impact of import incentive policies in 2009 on the industry, Wu Bolin said that there is indeed an impact on domestic high-end CNC machine tools, but the impact on the entire machine tool industry is not significant. He also said that some machine tool companies that carried out technical reforms benefited from this policy and they received preferential policies when importing some high-end parts and components.

The aforementioned experts in the electrical appliance industry stated that the import encouragement policy in 2009 did not cause too much impact on the domestic electrical and electronics industry. This was mainly due to the fact that the industry had enhanced its independent innovation capability in the past two years and increased the localization rate of products. Supercritical and ultra-supercritical thermal power generation equipment and high-power hydropower equipment with a capacity of more than 700,000 kilowatts have basically achieved localization, and some products, including complete sets of equipment, have been exported. In the bidding for some major projects in China, such as the Three Gorges Project, domestic companies gradually learned and mastered the key technologies from abroad by implementing the “bundled bidding” approach, which laid the foundation for localization of high-end equipment. Of course, some products in the electrical and electronics industry still need to be imported, such as insulation materials required in high-voltage and ultra-high-voltage equipment, and special cables for marine, mining, and marine use.

In addition, the experts also reflected that due to the country’s implementation of the “Encouraging Imported Technologies and Product Catalog (2009 Edition)”, the relevant audit procedures are relatively strict and the restrictions are relatively large. Therefore, the state gives the machinery industry a loan interest subsidy of RMB 5 billion. It has not been used up till now. Whether this has mitigated the industry's impact to some extent, according to expert analysis there are some reasons.

Behind peace, on the issue of the influence of national import policies on the industry, what Wu Lanlin is more concerned with is the implementation effect of the "Cross-Strait Economic Cooperation Framework Agreement" (ie ECFA). Wu Bolin stated that in 2011, the formal implementation of ECFA on both sides of the Taiwan Strait will mean that the machine tool industry will “open up the door to China’s Taiwan region to sell machine tools to mainland China. It will be a mid-range, small and medium-sized CNC machine tool, especially mid-range. The functional components of CNC machine tools have brought a lot of impact.” Statistics show that at present, the market share of mid-range CNC machine tools in Taiwan in China is 20% to 30%, while the proportion of functional components in the same grade is more than half. .

Once this share of the market is released, the impact on the Chinese machine tool industry can be imagined. Therefore Wu Bing asserted: "The impact of ECFA on China's overall machine tool industry does more harm than good."

Of course, on the other hand, the implementation of the ECFA will allow China's mainland machine tool factories to purchase some rolling features and turrets and other products in Taiwan. However, "this can't save much money," Wu Bolin analyzed.

Wu Bing also revealed that according to the latest news learned by the association from Taiwan, China, some Chinese Taiwanese machine tool companies are seeking to invest in their factories in Japan, Germany and other countries. Once this is done, these cooperative products are likely to enjoy ECFA's tariff preferences in the name of Chinese Taiwanese products and will drive them directly into the Chinese mainland market. This will be a follow-up and deeper impact of ECFA on the Chinese mainland market. Wu Bolin also stated that the ongoing negotiations in the China-Japan-Korea Free Trade Area may have a greater impact on the industry than the ECFA.

The deficit problem needs to pay attention to the state's encouragement of the import of high-end equipment and technology, which will inevitably affect the independent innovation capability of related domestic companies, and will have an impact on the localization of high-end equipment in the industry. This point, when the state promulgated the "Encourage Import of Technology and Product Catalogue" in 2009, the industry held this view and received strong response. Although the industry's response this year is still a lot, there are still some industry experts expressing concern. Zheng Guowei, member of the China National Machinery Industry Federation Committee of Experts, said that in 2010, imports of the machinery industry grew at a high rate. If the country continues to encourage imports, it is bound to further extend this growth. According to statistics, China's machinery industry imported a total of 255.347 billion US dollars in 2010, an increase of 41.14%, exceeding the level of 2008 (imports of 194.83 billion US dollars), a record high. At the same time, from the point of view of various sub-sectors of the machinery industry, its imports also showed an overall growth momentum: the largest increase was in the automotive industry, reaching 74.95%; followed by the machine tool industry, which was 66.73%; and the third was in the construction machinery industry, which was 65.93. %.

In addition, if we further expand imports, those sub-sectors with huge deficits will continue to increase their deficits. Zheng Guowei said that currently in the domestic machinery sub-sector, automobiles, instrumentation, machine tools, internal combustion engines, bearings, hydraulic parts, and seals are among the import and export trade deficits. Among them, the import and export deficits of the first three sub-sectors in 2010 were all above US$10 billion. Although the total output value of the machine tool industry has achieved rapid growth in recent years, its deficit has been increasing unabated. Even if the deficit is reduced in some years, the reduction is still very low. Under the background of "promoting the mouth," how to ease the further expansion of the deficit is worthy of industry attention.