Dear delegates, leaders, ladies and gentlemen:
Good morning!
The Second Member Congress of the Tunneling Machinery Branch of China Construction Machinery Association is held today in Zhengzhou. On behalf of the Branch, I would like to extend a warm welcome to all delegates present! I would also like to express sincere greetings to the vast number of employees in the tunneling machinery industry! And I would like to express heartfelt thanks to all leaders, experts, and media friends who have cared for and supported the work of the Association and the industry over the years!
At present, the whole Party and the entire nation are deeply studying and implementing the spirit of the 19th National Congress of the Communist Party of China, earnestly summarizing the development experience since the 18th National Congress, and planning the future direction of development. The five years since the establishment of our Branch in 2012 have been five years of rapid development and tremendous progress for China's tunneling machinery industry. The next five years, ten years, or even longer will be a critical period for our industry to further develop, grow, mature, and reach the world's summit. Therefore, we must follow the new development concepts proposed at the 19th National Congress of the Communist Party of China, comprehensively plan the future direction of development, and strive to create a new situation for the industry's development.
I will discuss three aspects:
I. Review and Summary of Industry Development over the Past Five Years.
China's tunneling machinery industry, represented by full-face tunnel boring machines, started in the 1970s. After a long period of exploration, it has gone through a rather tortuous and lengthy development path. In order to meet the requirements of domestic tunnel construction, the national "10th Five-Year Plan" and "11th Five-Year Plan" and the 86 Plan all included research and development projects for full-face tunnel boring machines. Since the beginning of this century, dozens of enterprises have successively joined the research, development, and production of full-face tunnel boring machines. However, until around 2010, foreign brands still accounted for more than 70% of China's full-face tunnel boring machine market, and the core key technologies of the products were still in the hands of foreigners.
After 2010, driven by the huge demand for tunnel construction machinery in domestic urban rail transit, water conservancy construction, and railway and highway construction, and with the support and guidance of relevant government departments, a group of entrepreneurs with keen vision and entrepreneurial courage made decisive investments. Through introduction, digestion, and innovation, they achieved leapfrog development and realized the explosive high-speed development of China's full-face tunnel boring machine industry.
The production situation of China's full-face tunnel boring machines in 2016 is shown in the following table:
With the substantial enhancement of the strength of China's full-face tunnel boring machine industry, products have begun to go overseas and participate more and more in international competition. According to customs statistics for 2016, 66 self-propelled tunnel boring machines (HS code 84303130) were exported, with an export value of 245 million US dollars, covering more than 30 countries and regions on five continents. (The customs statistical classification is not entirely consistent with industry names, for reference only.)
In terms of industrial scale, production increased from 141 units in 2012 to 388 units in 2016, an increase of 275%. China has leapfrogged to become the world's largest producer and largest market for full-face tunnel boring machines. See the table below: In terms of industrial structure, after several years of fierce market competition, survival of the fittest, and mergers and reorganizations, industrial concentration has greatly increased. A number of large specialized full-face tunnel boring machine production enterprises have emerged, and their R&D and manufacturing levels, marketing and service capabilities have continuously improved, ranking among the world's advanced enterprises. In particular, in recent years, domestic companies have successively merged or acquired well-known foreign enterprises, such as China Railway Engineering Equipment Group's acquisition of key technologies from Germany's Wirth, Caterpillar, and Canada's Tunnel Equipment Co., Ltd. (formerly Lovat), further enhancing the industry's technical strength and overseas marketing capabilities. At present, the market share of foreign-brand products in the domestic market has dropped to about 15%.
According to incomplete statistics, there are now more than ten large full-face tunnel boring machine production enterprises and nearly one hundred specialized supporting enterprises in China. The entire industry has more than 700,000 square meters of plant area, nearly 600 sets of various large special equipment, more than 1,500 R&D personnel, and an annual production capacity of more than 500 complete machines, plus a remanufacturing capacity of about 100 units per year. Over the past five years, the industry has cumulatively produced more than 1,000 various full-face tunnel boring machines, basically meeting the equipment requirements for tunnel construction. Cumulative exports have exceeded 150 units, and Chinese-made tunnel equipment is increasingly recognized by global users.
Over the past five years, the industry has also made considerable progress in R&D capabilities and technical levels. Five years ago, the industry mainly produced earth pressure balance and slurry shield machines of around 6 square meters. Large-diameter shields and hard rock boring machines were still dominated by foreign brands. After years of effort and progress, we can now develop and produce various earth pressure balance, slurry balance, and composite shield machines with diameters from 3.5 meters to 15 meters according to different geological conditions and tunnel requirements; large-diameter single-shield, double-shield, and open-type hard rock tunnel boring machines (TBM); various special-shaped shield machines, such as horseshoe-shaped shields, quasi-rectangular shields, large-section rectangular pipe jacking machines, and mining inclined shaft hard rock boring machines. This year, China Railway Engineering Equipment Group's 15.03-meter slurry shield rolled off the production line and China Railway Construction Heavy Industry's small-diameter (4-meter) R&D technology, and through continuous improvement and innovation in extensive engineering practice, product quality stability and reliability have also been greatly improved. Our domestically produced boring machine products are basically not inferior to the famous products of large foreign companies in domestic tunnel construction, and even perform better in construction applicability and service capabilities.
Another important product in tunneling machinery, the cantilever roadheader, reached a peak in production during 2012-2013, with annual sales of more than 2,000 units. In the following years, due to national economic adjustment, mainly the decline in coal mine construction demand, the industry shrank severely. In the past year or two, there has been restorative growth. The brief situation in 2016 is as follows: The reason why China's tunnel boring machine industry, mainly the full-face tunnel boring machine industry, has bucked the trend and achieved explosive development under the overall environment of national economic adjustment and transformation is first due to the pull of huge market demand, mainly from urban subway construction and large water conservancy projects; second, the strong support and guidance of government authorities, especially President Xi's personal inspection of China Railway Engineering Equipment Group, which greatly encouraged all employees in our tunneling machinery industry; and of course, most importantly, the hard work and struggle of all our employees. Here, I would like to once again express heartfelt thanks and respect to the technical personnel, the vast number of employees, and cadres fighting on all fronts of tunneling machinery R&D, manufacturing, sales, service, and construction!
II. Opportunities and Challenges for Industry Development
China's tunneling machinery development is in the most favorable period. Domestically, the "13th Five-Year Plan for the Development of a Modern Comprehensive Transportation System" proposes that during the "13th Five-Year Plan" period, total investment in transportation will reach 15 trillion RMB, including 3.5 trillion for railways, 7.8 trillion for highways, 0.65 trillion for civil aviation, and 0.5 trillion for water transport. The focus is on rail transit and highways. In water conservancy construction, investment during the "13th Five-Year Plan" period will be 2.8 trillion RMB, with 87 major water-saving and water-supply projects newly started, including the excavation of hundreds of kilometers of deep-buried tunnels. In addition, the level of mechanization in tunnel construction in China has greatly improved, with increasing use of full-face tunnel boring machines and cantilever roadheaders. Furthermore, the construction of urban utility tunnels in China has huge development potential and should become a major potential market for tunneling machinery. Internationally, first, the world economy is slowly recovering, and the strength accumulated by China's manufacturing industry over many years should have more opportunities in the international market; second, the "Belt and Road" initiative strongly advocated by China involves dozens of countries and regions along the route, with the focus on connectivity and strengthening infrastructure construction such as railways, highways, and ports, in which China's construction machinery should have great potential. Third, a number of developing countries, such as those in South Asia, Southeast Asia, Central Asia, Africa, and South America, have too much backlog in infrastructure construction and great potential demand for construction machinery. These are all opportunities for the development of China's tunneling machinery. However, opportunities are not the same as markets; they are only possible chances for development. We need to do our work well and strive to turn opportunities into success.
At the same time, there are still many problems in our development and many challenges to face. Domestically, we cannot expect the market to remain booming. The process of the construction machinery market going from prosperity to decline and experiencing great fluctuations in previous years is, in a sense, a manifestation of economic laws. At present, the suspension of some urban subway projects is a signal. Therefore, we must have a calm analysis and judgment of the market and not blindly expand production capacity. In foreign markets, we are still in the exploratory stage and do not yet have the capacity for large-scale sustained exports. Our marketing still lacks experience, and brand building is far from sufficient. We need to make great efforts to strengthen and improve.
From the perspective of the industry's own development, there are still some shortcomings. I have said many things before, and a consensus has basically formed in the industry. Here I will emphasize a few main issues. First, the localization of key components. Although we have talked about it for several years and done a lot of work, the situation has not fundamentally changed. Main bearings, main reducers, and key hydraulic components are still mainly imported. Domestic supporting manufacturers have a poor growth environment and insufficient support. I hope the entire industry will raise awareness from the height of industrial security and healthy development, and that competent authorities will increase support, striving for a breakthrough during the "13th Five-Year Plan" period. Second, the issue of opening up the international market. At present, the export rate of the industry's products is only about 10%. We do not yet have several large-scale and stable overseas markets. If we cannot improve this situation quickly and truly form both domestic and international markets, it will be impossible to achieve sustained and stable industrial development. I hope enterprises with export strength will take a longer view, not haggle over a few domestic orders, and increase efforts to open up international markets. In this regard, I believe brand promotion and foreign trade talent are two key issues. Third, further standardizing the market environment and improving market order. After years of development, China's full-face tunnel boring machine industry has formed an industrial structure with state-owned enterprises, foreign-funded enterprises, joint ventures, and private enterprises coexisting, and large, medium, and small enterprises coexisting. The top three enterprises account for more than 60% of total sales, and the industrial pattern is relatively reasonable. Logically, vicious competition should not form, but the fact is that in recent years, improper price competition has intensified, and industry protection and local protection still exist to varying degrees. These are clearly detrimental to healthy and sustainable development. I hope leaders at all levels in the industry will work together to establish effective mechanisms to alleviate and improve the market environment.
III. Study and Implement the Spirit of the Party's "19th National Congress" and Create a New Situation for the Development of China's Tunneling Machinery Industry.
The convening of the Party's "19th National Congress" has opened a new stage in China's socialist construction. From now until 2020 is the decisive period for building a moderately prosperous society in all respects. The series of new development concepts proposed at the "19th National Congress" are the guiding principles for our next stage of work. First is the concept of scientific development: innovative development, coordinated development, green development, open and shared development. We must unswervingly consolidate and develop the public sector of the economy and unswervingly encourage, support, and guide the development of the non-public sector. We must let the market play a decisive role in resource allocation. The "19th National Congress" clearly stated that China's economy must shift from high-speed development to high-quality development. At present, we are in a critical period of transforming the growth model, optimizing the economic structure, and converting growth drivers. We must emphasize quality first and efficiency priority, place the focus of economic development on the real economy, and accelerate the development of advanced manufacturing. Competition must be fair and orderly, and enterprises must survive the fittest.
The development of China's tunneling machinery industry is also at a critical stage. Through 10 years of effort, we have achieved the largest scale and met the needs of domestic construction. In another 5 to 10 years, we should be able to become the world's strongest, with comprehensive strength ranking first in the world, just like high-speed rail and port machinery in China's manufacturing industry, becoming another calling card for China. I think this is a goal and dream for our tunneling machinery industry. To achieve this goal, we must work solidly in accordance with the development concepts proposed at the "19th National Congress." Specifically for our industry: First, further emphasize product quality, improve product reliability and adaptability, and make first-class products, not low-priced second-rate products. Second, there must be breakthroughs in the development of domestic key components; this is not only the task of related supporting component enterprises but also the responsibility of main machine enterprises. Third, further strive to open up international markets and strive to increase the export rate year by year to over 30%. Fourth, strive to create a fair and orderly competitive environment in the industry, advocate coordination and unity, and present a united front to the outside. I believe that the enterprises and leaders at all levels, technical personnel, and the vast number of employees in our industry are of high quality, with the strongest political level and professional capabilities. Under the guidance of the spirit of the Party's "19th National Congress," we will certainly overcome all difficulties on the road ahead and achieve our goals and dreams.
Finally, I will say something about the Association's work. The work of this session of the Association will be summarized in detail by the Secretary-General. Generally speaking, we have done some work, but it is still far from the requirements and expectations of the vast number of members, so I will not repeat it here. I want to say three things: First, I sincerely thank everyone for their trust and support of the Association. Second, I hope everyone will put forward opinions and suggestions on the Association's work. Third, I hope everyone will continue to support the work of the next session of the Association as always.