China’s Construction Industry shows no Sign of Recovery

Published By : 24 Jun 2015 | Published By : QYRESEARCH

The second largest producer of building equipment in Asia, Hitachi Construction Machinery Co. is widening cuts in production at its China factory in order to trim excess stockpiles since sales of construction machinery and equipment have been declining more than what was initially anticipated. 

The construction industry in China has shown no signs of recovery and the industry sales of excavators are estimated to be slashed by half later this month. Yuichi Tsujimoto, chief executive officer of the Japanese construction company said in an interview on Tuesday that this slump in sales will match the drops in April as well May. He added that the company intends on operating its plant in Anhui, the eastern Chinese province, at a capacity of 40 per cent to 50 per cent in the third quarter of this year.

At the Tokyo headquarters of Hitachi Construction, Yuichi Tsujimoto said that it feels odd at the moment that even though construction plans exist in China, they are not being carried out. He added that he did expect the demand in China to decline, but not by such a wide margin. 

Construction projects have been stalled in China owing to slower growth in the largest economy of Asia. This, in addition to President Xi Jinping’s anti-corruption campaign, has further threatened the excavator market. This market has already been predicted to contract to less than a quarter of the peak in 2010. Komatsu Ltd. and Caterpillar Inc. are the two forces in China that Hitachi competes against. 

China is the largest buyer of commodities in the world. The slowdown in this country is also being connected to the mining equipment demand, which accounts for 15 per cent of the sales in Hitachi. The mining equipment demand is expected to drop by over 10 per cent this year, Tsujimoto stated.
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