Monday, April 23, 2007

Imports threaten China's economy

A senior Chinese industry official has warned the country's economy and national defence are at risk from a reliance on imported key components for machine tools.

By 2010, the engineering manufacturing sector would need more than 100,000 machine tools, 40 percent of them medium and high-quality, said China Machine Tool and Tool Builders Association vice-chairman Yu Chengting.

However, about 90 percent of the digital-control systems currently used by Chinese manufacturers were produced by foreign companies, said Yu.

Machine tools were vital equipment for the national defence, auto making, ship building, space and aviation industries.

The country's machine tool building industry had reported a 20-percent growth in both output and sales revenue for six consecutive years.

The digital control system was a key component accounting for 30 to 50 percent of a machine tool's overall cost.

"If manufacturers continue to rely heavily on key component imports, the country's economy and national defence will be stunted," warned Yu.

As the world's largest machine tool consumer and importer, China needed to intensify the research and development of homegrown equipment, especially digital-control systems, said Yu.

Nevertheless, the country had seen a declining import growth rate of high-quality machine tools and increasing dependence on domestic equivalents.

Customs statistics show China's digital-control machine tool imports dropped from 40 percent of all high-end machine tools sold in 2005 to just 10 percent last year.

Only two years ago, China's machine tool market was dominated by Japanese and German companies who together sold 19,000 medium and high-quality machine tools in the country.

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