The excavation machinery industry is very likely to maintain a stable growth trend in the coming years.

Expert industry constructionopinions

Innovation as a key driver of growth

Industry experts point out that innovation is the inexhaustible driving force behind the advancement of China's construction machinery sector. It is not only the only way to overcome cyclical downturns and reach new heights, but also the proven strategy for transitioning from followers to market leaders. With the rapid development of technologies such as 5G communications, big data, cloud computing, and artificial intelligence—deeply integrated with various types of engineering machinery—new opportunities for value creation are emerging.

Excavator CycleIndustry

"When a bulldozer roars, prosperity follows."

If the construction machinery industry is a barometer of macroeconomic growth, then the excavator—the sector's crown jewel—serves as a direct indicator of investment intensity and economic vitality. Since stabilizing and rebounding in 2016, the industry has maintained high growth for five consecutive years, with a particularly strong performance this year. From January to November, excavator sales in China exceeded 296,000 units, representing a year-on-year increase of 37.4%, surpassing the previous year's annual sales and setting a new record.

Wu Peiguo, Secretary General of the China Construction Machinery Association, commented, “Since March of this year, the domestic market has repeatedly broken monthly sales records, far exceeding industry expectations. This prolonged period of extraordinary growth is driven by the combined effects of product renewal cycles and inventory cycles. The construction machinery sector, represented by excavators, has successfully navigated both bull and bear markets, becoming a vital economic engine during the pandemic.”

Keeping your feet on the ground amidst prosperity

Even amid the industry boom, some experts have offered cautious perspectives, prompting deep reflection among attendees.

Li Hongbao, executive vice president and secretary-general of the Excavator Branch of the China Construction Machinery Association, cautioned, “Every growth phase in an industry brings both opportunities and risks. Companies must remain rational. Right now, when the excavator market is booming—with soaring sales and soaring stock prices—is precisely when risks are accumulating. According to our surveys, China’s excavator production capacity has reached approximately 600,000 units, far exceeding market demand. This rapid capacity expansion warrants serious attention. Companies must keep a cool head, avoid uncontrolled capacity expansion, and refrain from engaging in price wars; otherwise, they risk plummeting into collapse.”

He Qinghua, analyzing industrial cycles, explained, “ Historical data shows that excavators, being capital-intensive assets with prolonged depreciation, exhibit distinct cyclical patterns: short cycles every 3–4 years, medium cycles every 10 years, and long cycles every 20 years. The sector experienced a sharp decline in 2012, so risk management should never be relaxed.”

He added, “ In 1999, only China’s XCMG was listed among the top 50 global construction machinery companies. Today, China has 12 companies on that list, four of them in Changsha alone. Chinese manufacturers have gone from market followers to global leaders. Each cycle has made them even stronger, and this time will be no exception. With the integration of 5G, big data, AI, and other advanced technologies, the creation of new value is inevitable.”

Their views resonated with the attendees. Long Hui, president of Jiangsu Lihao Construction Machinery, told the Stock Journal , “ Following the 2012 recession, many companies underwent transformations, mergers, and diversification, giving rise to a new generation of leading machinery firms. By 2016, when the market recovered, the major players quickly gained dominance thanks to their comprehensive strengths, significantly increasing market concentration. In the future, leading companies will focus on core markets, while smaller companies will specialize in niche segments; differentiated competition will foster a healthier industry. Automation replacing manual labor and the international circulation of new and used equipment will be the main drivers of growth in the next decade.”