**Editor's Note:** (1) This paper is the result of research conducted by the China Machinery Manufacturing Industry Development Report research group at the Institute of Strategy and Planning, Machinery Industry Information Research Institute. The research team members include Shi Yong, Yan Enmin, Qian Tao, Zhao Fengjie, Zhang Yan, Chen Yu, Cheng Du, Kong Yanyan, and Wang Zhenlin. The author of this report is Zhang Yan. (2) Unless otherwise specified, the term "equipment manufacturing industry" refers to the full-scale equipment manufacturing sector, which includes nine categories: metal products, general machinery, special machinery, automotive manufacturing, railway, shipbuilding, aerospace, electrical machinery, computer and communication equipment, instruments, metal products repair, and other related industries. **I. Overview** In 2013, China’s equipment manufacturing industry continued its slow recovery, with a stable foundation for growth. However, internal driving forces remained weak, and there were risks of further decline. The added value of large-scale equipment manufacturing enterprises increased by 11.03% year-on-year, outpacing the national industrial growth rate by 1.33 percentage points. Among the 88 key equipment categories monitored, 53 products saw growth, accounting for 60.2%. Export delivery value reached 648.45 billion yuan, up 4.04%, while main business revenue hit 28,438.64 billion yuan, growing by 12.35%. Profit totaled 175.25 billion yuan, rising 16.07%, with profit margin at 6.17%, up 0.2 percentage points from the previous year. In the computer, communications, and other electronic equipment manufacturing sector, the added value grew by 10.9%, exceeding the national average by 1.2 percentage points. Of the 70 monitored products, 41 showed growth (58.57%). Export value was 1,989.89 billion yuan, up 0.61%, and revenue reached 20,715.99 billion yuan, increasing by 13.17%. Profit rose by 15.25%, with a profit margin of 6.87%, up 0.13 percentage points. **II. Key Industry Trends** (1) **Automobile Production and Sales Reach New Heights** In 2013, total automobile production and sales reached 22.16 million and 21.9841 million units, respectively, growing by 14.76% and 13.87%. Passenger car sales increased by 16.5% and 15.71%, while commercial vehicle sales rose by 7.56% and 6.4%. Sales of cars under 1.6 liters accounted for 66.51% of total passenger car sales, down slightly from the previous year. Chinese brand passenger car sales grew by 11.4%, but their market share dropped by 1.6 percentage points. (2) **Electrical Machinery Industry Growth Accelerates** The added value of the electrical machinery industry rose by 10.9% in 2013, up 1.2 percentage points from the previous year. Wind turbine output turned positive in November, increasing by 9.6%, while hydroelectric unit output fell by 4.8% in December. Transformer output grew by 6.6%, and power cable output increased by 4.8%. (3) **Computer, Communications, and Electronic Equipment Industries Maintain Steady Growth** The added value of these industries rose by 11.3% in 2013, with consistent monthly growth between 11.1% and 11.5%. Output of mobile phones increased by 25.8%, and integrated circuits rose by 10.4%. Optoelectronic device output surged by 28.8%. (4) **Machine Tool Industry Sees Narrowing Decline** Machine tool output declined by 2% year-on-year, a reduction of 11.4 percentage points compared to the previous year. CNC machine tools grew by 2%, and metal forming machine tools fell by 1.3%, with a smaller decline than the prior year. (5) **Construction Machinery Output Grows** Loader output rose by 1.8%, compaction machinery by 6.9%, cement equipment by 2.6%, and concrete machinery by 6.3%. Excavator output turned positive in December, increasing by 1.4%. (6) **Agricultural Machinery Output Varies** Medium-sized tractors and mini-tractors increased by 13.9% and 4.9%, respectively. However, feed production equipment and large tractors saw declines of 6.1% and 1.7%. (7) **Instrumentation Industry Continues Strong Growth** The added value of the instrumentation industry rose by 11.8% in 2013. Automotive instrumentation output increased by 13.9%, while electrical instrumentation fell by 2.1%. (8) **Shipbuilding Industry Shows Positive Structural Adjustment** Shipbuilding completion volume fell by 24.7%, but new orders jumped by 242.2%. By the end of 2013, held orders reached 131 million DWT, up 22.5%. China maintained leading positions in global shipbuilding, with 41.4% of completed ships, 47.9% of new orders, and 45% of held orders. High-tech ship orders also grew significantly, including six LNG vessels and 64 large container ships. **III. Main Features of Economic Operations** (1) **Growth Rate Continues to Slow and Then Accelerate** The industry’s added value grew steadily throughout the year, reaching 11.03% in 2013. In the first three quarters, growth rates exceeded those of all industries. (2) **Economic Benefits Rebound Faster Than Production and Sales** Main business revenue increased by 12.35%, and profits rose by 16.07%, showing stronger recovery than production and sales. (3) **Management and Financial Costs Decrease** Companies improved cost control, reducing financial expenses. Management costs grew by 12.43%, while interest expenses dropped significantly. **IV. Major Problems in Economic Operations** (1) **Market Demand Remains Weak** Despite some improvement, demand remained sluggish, especially for metallurgical and mining equipment. (2) **Equipment Prices Remain Low** Oversupply and price competition led to falling prices, with the equipment price index below 100% for 25 months. (3) **Foreign Trade Exports Face Challenges** Although exports turned positive in late 2013, trade frictions and protectionism persist. Export growth was lower than the national average, particularly in electronics. (4) **High-End Equipment Dominated by Foreign Firms** Foreign companies often suppress domestic high-end equipment by lowering prices once local alternatives emerge. **V. Situation Analysis and Forecast** Globally, economic growth is expected to remain moderate, with limited recovery momentum. Domestically, structural reforms are accelerating, and China’s economy is expected to grow around 7.5% in 2014. The equipment manufacturing industry will see more opportunities as demand expands and policies support development. **VI. Policy Recommendations** (1) **Reform and Innovate Industry Management** Eliminate restrictive regulations, expand demand, and explore new subsidy models. (2) **Strengthen Economic Monitoring and Early Warning** Improve data transparency, monitor key sectors, and develop countermeasures for emerging challenges. (3) **Accelerate Implementation of Major Science and Technology Projects** Support R&D, enhance infrastructure, and promote innovation in critical areas like aerospace and semiconductors. (4) **Establish a Special Project for Industrial Automation** Promote automation technologies and improve integration between digital and traditional industries. (5) **Strengthen Strategic Planning and Standards** Develop long-term strategies, refine industry standards, and encourage green and energy-efficient practices. (6) **Accelerate Domestic Technical Equipment Policies** Implement policies to support the adoption and localization of major technical equipment, encouraging innovation and market expansion.

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