According to the 12th Five-year Development Plan for the High-end Equipment Manufacturing Sector released on May 7th, the sector will account for 15% of the overall equipment manufacturing industry by 2015 and 25% by 2020. The goal is that this will ultimately become one of the pillars of the national economy.
High-end equipment mainly includes hi-tech, high value-added equipment needed for the transformation/upgrade of the traditional sectors and for the development of the strategically-important and emerging sectors. At the current stage, key target areas of the high-end equipment manufacturing sector include the aviation, satellite and application, urban rail transit (URT), maritime engineering and smart manufacturing sectors.
In 2010, revenue of China’s high-end equipment manufacturing sector totaled RMB 1.6 trillion, about 8% of that of the equipment manufacturing industry. With a large number of equipment enterprises in place, e.g. the million KW-grade ultra-supercritical thermal power units, the million KW-grade pressurized water reactor (PWR) equipment, the 1,000kw ultra-high voltage AC power transmission and transformation equipment, the ±800KV DC power transmission and transformation equipment, the key equipment for million t/a ethylene plants, the ultra-heavy-duty CNC horizontal lathe, high-speed precise processing center, the new ARJ21 regional airliner, and the 3,000m deep-water semi-submersible drilling platform, the high-end equipment manufacturing sector is basically established in China.
However, Chinese industry is still behind the world leaders for a number of reasons, including weak innovation ability (resulting in overdependence on international suppliers for key technologies and critical parts), low product reliability, absence of business presence in the high end of the industrial chain, relatively small scale, low market satisfaction, incomplete industrial system and vulnerable infrastructure and service system. In the meantime, the transformation of the national economy and the development of strategic, emerging sectors have raised higher requirements for a green, smart, service-oriented equipment manufacturing sector, opening a huge potential market. The next 5-10 years are expected to be an important period of strategic opportunities for China’s high-end equipment manufacturing sector.
The 2015 targets have been identified for the sector.
The overall scale of the sector will be escalated to a higher level. Total revenue of the sector will exceed RMB 6 trillion, accounting for 15% of that of the overall equipment manufacturing industry, along with the percentage of value added to 28% of industry output, and a much larger international market share.
The innovation ability of the sector will be significantly enhanced. An industrial innovation system backed by resources in the manufacturing, research and academic communities will be basically in place. R&D inputs of major companies will account for over 5% of their revenue. A number of IPR-backed brands will be established.
Infrastructure and accessory facilities will be enhanced significantly. Significant improvement will be made to key accessory facilities, as well as the manufacturing ability of key equipment, parts and basic components of high-end equipment, with performance and quality comparable to those of world leading products. Key target areas of the high-end equipment sector will achieve a 30% smart operation rate.
The industrial structure of the sector will be optimized continuously.
Along with business groups with international influence, a large number of manufacturers with distinct competitive edges featuring “focused operation, and premium, specialized, and new products/services” will be in place.
A number of government-backed major innovations and development projects will be launched to facilitate the industrialization of the regional airliner and general aviation sectors, the space infrastructure development, and the innovation and development of advanced URT equipment and key parts/components, deep-sea engineering equipment and smart manufacturing equipment. Stronger financial, fiscal and taxation support will be provided to drive technical upgrades and industrial structure optimization, aiming at breakthroughs for the development and industrialization of critical technologies and products.
By 2020, the revenue the high-end equipment manufacturing sector will account for 25% of the overall equipment manufacturing industry, as compared with the current level of about 8%, and the share of value added will be up by 2 percentage points.
The Five-year Plan also includes plans for two component sectors.
According to the 12th Five-year Development Plan for the Urban Rail Transit Equipment Sector, China’s URT equipment sector’s revenue will exceed RMB 400 billion in 2015, with R&D input accounting for over 5% of that amount. In general, the sector will be able to provide the products needed for URT development in China. With revenue of over RMB 650 billion, the sector would achieve the goal of globalization and rank among the world leaders by 2020.
As of the end of 2010, 49 URT lines were in operation in 13 cities across China, with a total mileage of 1,425.5 km. In addition, another 96 lines, with a total mileage over 2,200 km were under construction. According to existing plans approved by the central government, by 2015 85 URT line construction will start in 30 cities, with a total mileage over 2,700 km.
According to the 12th Five-year Development Plan for the Smart Equipment Manufacturing Sector, by 2015 the sector will be able to generate annual revenue of over RMB 1 trillion based on an annual growth rate of over 25% and an industrial value-added growth rate of 35%. With annual revenue of over RMB 3 trillion, the sector would be able to satisfy demands from key areas of the national economy by 2020.
In addition to the support of the regulatory authorities, another reason for the release of separate plans for the URT and smart equipment sectors is that the authorities have a clear vision about the development path of both sectors. That, in turn, translates to bigger potential for future development.
The release of the above plan and its two component plans once again reflects the strong commitment by the government to economic transformation. As one of the seven strategic emerging sectors supported by the government, the high-end equipment manufacturing sector plays a critical role. Benefiting from tremendous market demand, it is one of the key drivers of the transformation of traditional industries. In addition, it is also an important part of other strategic and emerging sectors, including energy conservation and environmental protection, new energy, biology and next-generation IT.