Domestic demand for construction machinery in China is expected to continue to recover

Since the State Council released the "Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Trade in" in March this year, favorable policies have been frequently introduced, and the field of engineering machinery equipment renewal has attracted much attention.

On April 28, 2024, Shanghai issued a public notice soliciting opinions on the "Management Measures for Encouraging the Renewal of Subsidies for National Second tier Non road Mobile Machinery in Shanghai", clarifying the product types, support scope, and specific subsidy standards for the renewal subsidies for national second tier non road mobile machinery in Shanghai.

The subsidy policy update in Shanghai this time is relatively strong, covering mainstream machinery categories such as forklifts, excavators, loaders, aerial work vehicles, port machinery, airport ground handling equipment, etc. The subsidy amount is roughly 10% of the purchase amount, and the maximum subsidy amount for excavators is 360000 yuan.

Regarding this, the relevant person in charge of Sany Heavy Industry stated that promoting large-scale equipment updates this time will be conducive to accelerating the upgrading of old construction machinery, while also stimulating potential demand for equipment updates. It is expected to accelerate the upgrading of construction machinery equipment and have a positive promoting effect on the recovery of the entire construction machinery industry.

Since April 2021, China's construction machinery industry has entered a downward cycle, which has lasted for three years. The person in charge of XCMG Machinery stated that there have been some positive signs in the construction machinery industry. For example, a trillion yuan additional treasury bond issuance project and the policy of "large-scale equipment renewal" will help the industry recover in the medium and long term.

Pacific Securities stated that the real estate industry is expected to continue driving domestic demand for excavators to warm up, and it is recommended that investors pay attention to investment opportunities in the construction machinery sector.