On May 14, 2025, the "22nd High-Level Forum on Construction Machinery Development," themed "Opening a New Chapter, Expanding New Horizons, and Achieving New Results," was successfully held in Taiyuan. At the forum, Lu Chuan, Deputy Secretary of the Party Committee and President of XCMG Construction Machinery Co., Ltd., delivered a keynote speech titled "Gathering Momentum to Open a New Chapter, Transforming to Expand New Horizons, and Achieving New Results through Solid Work—Contributing New Strength of the Construction Machinery Industry to Chinese-Style Modernization."

The following is a summary of the speech.

Hello everyone! I am very pleased to be invited to attend the 22nd High-Level Forum on Construction Machinery Development. Taking this opportunity, on behalf of XCMG, I would like to express my highest respect and most sincere gratitude to leaders at all levels and friends from all sectors who have long cared for and supported XCMG!

2025 is not only the final year of the 14th Five-Year Plan, but also a year in which the construction machinery industry faces unprecedented opportunities and challenges brought by changes in the internal and external environment. At this critical juncture, the convening of the High-Level Forum on Industry Development by the China Construction Machinery Association (hereinafter referred to as the Association) is of great practical significance. As an important industry in China's equipment manufacturing sector, the construction machinery industry has the responsibility and obligation to actively respond to national strategies and promote sustainable industry development. XCMG has always remained committed to its main business, adhered to reform and innovation, shifted from scale growth to value-led high-quality development, and strives to contribute XCMG strength to the industry's transformation and upgrading. In line with today's forum theme, I will mainly share three aspects.

First, opening a new chapter driven by the "triple" momentum

From a macro perspective, despite the complex external environment, there are also three driving forces—an upward market cycle, policy dividends, and structural transformation—that are expected to usher the industry into a new round of development.

First, market stabilization is expected to drive the industry into an upward cycle

The domestic market is improving cyclically. The construction machinery industry is a strongly cyclical industry, mainly affected by changes in downstream demand from real estate, infrastructure, and exports, as well as its own equipment renewal cycle and environmental emission policies. A complete cycle for domestic construction machinery is generally 8 to 10 years. The industry entered a downward cycle in the second half of 2021. Judging by major cycle time nodes, the domestic market is now facing a new upward cycle. At the same time, the service life of major construction machinery such as excavators, lifting machinery, and concrete machinery is about 8 years. It is expected that, driven by replacement demand for existing equipment, 2025 is also likely to see a new round of concentrated replacement.

The export market continues to grow rapidly. In recent years, Chinese construction machinery enterprises have seized the trend and achieved a transition from trade exports to going global in technology, capital, brands, and talent, forming a "four-in-one" international development model of product exports, overseas plant construction, cross-border mergers and acquisitions, and global collaborative R&D, with export value growing continuously. Overseas markets have not only absorbed most of China's construction machinery production capacity, but more importantly, effectively hedged the risks of the domestic market's downward cycle.

Second, policy dividends are driving the accelerated release of recovery signals

Since September 26, 2024, the state has intensively introduced policies to stabilize the economy and growth. Special bonds and ultra-long-term special government bonds have been focused on "two major and two new" projects, providing funding support for transportation infrastructure, energy security and new energy infrastructure, water conservancy and disaster prevention and mitigation projects, urban renewal and new urbanization, and other projects. At the same time, it is worth noting that the steady progress of local government debt resolution will release more funding space for infrastructure projects, creating a pulling effect on the construction machinery industry. This transmission chain—from fiscal improvement to project implementation, and from infrastructure recovery to equipment increments—will positively promote the entire industry.

In the Government Work Report at the Two Sessions on March 5 this year, the main measures proposed included fiscal macro-control, new urbanization construction, rectifying involutionary competition, and livelihood-benefiting projects. It also highlighted major tasks and goals such as stabilizing investment growth, promoting green and low-carbon industrial transformation, and international economic and trade cooperation. These policies demonstrate the state's strong determination to build a manufacturing powerhouse and an ecological economy, and also boost confidence in industry development.

Third, structural transformation is driving renewed reconstruction of market demand

Driven by policies and catalyzed by the external environment, China's construction machinery industry is showing a trend of structural transformation. In terms of incremental demand areas, high-standard farmland construction, rural mechanization, and municipal environmental projects are driving demand for small equipment and electric equipment; development in fields such as wind power and nuclear power is driving demand for large, high-performance lifting machinery. In terms of application structure optimization, taking excavators as an example, the share of real estate in downstream applications has dropped from a peak of 40% to 20%, while the share of municipal and rural demand has risen to about 40%. Structural transformation has reduced dependence on real estate. From the perspective of technological upgrading, the penetration rate of new energy products is gradually increasing. For loaders, the penetration rate was less than 1% in 2021, rapidly grew to nearly 10% in 2023, exceeded 20% in 2024, and is expected to exceed 30% in 2025. The overall penetration rate of new energy products is steadily rising and becoming an important driving force for industry transformation and upgrading.

At the same time, with the deep integration of emerging technologies such as artificial intelligence, the Internet of Things, and big data with construction machinery, intelligent, automated, and remote-controlled construction machinery products are gradually becoming mainstream in the market, further driving market reconstruction.

Overall, the construction machinery market will generally stop falling, stabilize, and enter an upward cycle. In the next 2 to 3 years, the market will maintain a trend of steady growth with upward momentum. Unlike the previous boom cycle, which was clearly driven by real estate, the current boom cycle lacks the short-term real estate driving factor. It will be mainly characterized by increased penetration of new energy and intelligent equipment and replacement demand for equipment renewal. Therefore, it is judged that the upward cycle will be more sustained.

Second, expanding new horizons through the "five transformations" of upgrading

From the perspective of industry development, the construction machinery industry is currently accelerating its transformation toward high-end, intelligent, green, service-oriented, and international development, achieving industrial structure optimization through continuous reform and innovation. Facing this profound industry change, XCMG has entered a new period of industrial "five transformations" upgrading and is gradually building a new path for high-quality development.

First, high-end development is imperative. The continuous emergence of super projects worldwide has sharply increased demand for large-scale, high-end construction machinery equipment. Therefore, China's construction machinery industry is at a critical moment of moving from quantitative accumulation to qualitative leaps, and from breakthroughs at individual points to systematic capability improvement.

Second, intelligentization drives change. With the continuous development of technologies such as artificial intelligence and the industrial internet, equipment interconnection, unmanned products, and intelligent manufacturing are bringing new development opportunities to the industry. Industry enterprises are accelerating R&D of unmanned, digital, and intelligent products, using intelligentization and digitalization to improve production efficiency, reduce production costs, and transform operating models.

Third, green development leads progress. Under the guidance of the national "dual carbon" strategic goals and the tightening of environmental policies, construction machinery enterprises are accelerating the replacement of old and new products, gradually phasing out high-energy-consumption and low-efficiency equipment, and vigorously developing various new energy products such as pure electric and hybrid products.

Fourth, service-oriented development has great potential. At present, the competition chain among enterprises has shifted from traditional sales competition to competition across the entire life cycle and value chain. In the industry's huge stock market, customer demand for business models and product solutions is changing, and demand for service-oriented offerings is gradually increasing.

Fifth, internationalization has broad prospects. At present, the global construction machinery industry still has broad development space overseas. We must unswervingly follow a high-level, high-quality internationalization path, achieve stronger and more sustainable development, and jointly protect the brand image and credibility of Made in China.

Systematically speaking, the construction machinery industry must use the "five transformations" to solidify the foundation of development strength, accelerate the cultivation of endogenous growth momentum, and respond to the uncertainty of rapid changes in the external environment with the certainty of high-quality development, so as to achieve sustainable breakthroughs in transformation and upgrading.

Third, achieving new results in the global rise of Chinese brands

From a global perspective, the development of the world's construction machinery industry has gone through industrial shifts from the mechanization start led by Europe and the United States (early 20th century), to Japan's lean innovation (1870s), and to the large-scale rise of Chinese enterprises (21st century). Chinese construction machinery manufacturers have risen to become a globally competitive high-end equipment manufacturing industry and a shining名片 of Made in China renowned worldwide.

Taking this opportunity, I would also like to put forward two proposals.

First, jointly build an ecosystem for high-quality industry development

At present, the construction machinery industry is in a critical period of transformation and upgrading. High-quality development of China's construction machinery industry is an important aspect of realizing the global rise of Chinese brands. The industry must actively respond to the national call, effectively address "involutionary" competition, strengthen collaborative exchanges within the industry, and promote sustainable industry development.

Second, solidify the foundation of industrial and supply chain resilience

Although domestic construction machinery has made notable progress in the R&D and manufacturing of major technical equipment, engineering applications, and key components, there is still a gap before full independent controllability is achieved. Some components are "available" but not "excellent," and supply chain resilience is not strong in the face of tariff barriers. In response to this situation, upstream and downstream players in the industry must accelerate breakthroughs in core technologies and common technologies for high-end components, and build supply chain security and globalization capabilities.

In the long run, overseas markets will remain a large incremental market. We must actively practice the national "Belt and Road" initiative, accelerate the leap from product exports to brand globalization, and lay a solid foundation for the global rise of Chinese construction machinery brands.

Leaders and colleagues! In the face of many challenges brought by global geopolitical conflicts, trade barriers, and exchange rate fluctuations, as well as the new situation of rapid evolution of artificial intelligence technology leading this round of technological revolution and industrial transformation, we must unite closely, promote industrial innovation through technological innovation, and drive high-quality industry development through industrial collaboration. I hope that through this forum, we can join hands with industry partners to gather momentum, innovate and break through, and contribute new strength of the construction machinery industry to Chinese-style modernization through connotative high-quality development.