ST 007-10 Lohr, 2010-05-10

China — An Economic Giant in a State of Transition

China is the world's economic powerhouse. The country has not only withstood the economic crisis better than other countries, but it also witnessed stronger growth than expected last year. The People's Republic has long since been a key market in Asia for German machine and system manufacturers, as well as being an important partner country globally. In political and economical circles, it is hoped that EXPO 2010 Shanghai (China), which this year is based around the motto "Better City, Better Life", will generate further positive impetus for China's development.

The People's Republic of China is an economic giant in a state of transition. Enormous growth forces have been released here in China, the world's most populated country with its 1.3 billion inhabitants. After a rapid economic rise, China is now the world's third largest economy and third largest trading nation, and it could even overtake Japan as the second largest economy during the course of 2010. Expects are predicting that the Middle Kingdom will be the world's largest economy by the end of this decade. Despite all its progress, it is important not to overlook the fact that China is still considered an emerging market based on an average per capita GDP of approximately 3719 dollars in 2009. This contradiction reflects the huge regional differences in economic development and the fact that more than 60% of the population lives in rural areas.

China was one of the first countries to come out of recession. Over the past two years, gross domestic product (GDP) has risen by 9.6% and 8.7% respectively. The economic program introduced by the Chinese government supported this development, particularly in 2009. The Chinese government is expecting a growth of 8% in GDP this year. For German exporters, China could continue to be one of the key markets outside Europe in 2010.

Alongside the comparatively high growth in GDP, sustained investment activity, relatively stable industrial production, and stable domestic consumption are what makes China stand out. Public debt and foreign debt is low despite expansive fiscal policy. There is potential for improvement in the huge consumption of resources and in the significant reliance on energy and raw material imports. Also, productivity is at a low level among many small and medium-sized enterprises with several industries in the People's Republic continuing to be dependent upon foreign technologies and suppliers. Equally, there is considerable dependency on exports to the US and Europe, particularly in Southern China. However, the revaluation of the renminbi yuan expected by many experts this year could dampen the export trade. Some economists believe the adjustment is a basic requirement for addressing the imbalances that exist in China's economic development.

Investment in infrastructure and in the energy sector is another key growth driver. For example, China plans to double the national highway network by 2020 and to extend its railroad network by 40,000 kilometers. At the same time, 97 new airports are to be constructed and around 25 cities will invest in underground systems. In the energy sector, China has set itself the target of reducing harmful greenhouse gas emissions by 40–45% by 2020 compared with 2005 levels. This will mean increased investment in renewable energy sources such as wind energy. The Chinese government expects to have a wind energy capacity of 150 gigawatts installed by 2020. In addition, China is planning to considerably expand automotive production and steel manufacture.

Great Demand for Machines Produced in the West

China has long since been the largest market in Asia, particularly for German machine and system manufacturers, as well as becoming a key partner country globally. The machine and systems sector just keeps growing in the People's Republic — at the height of the crisis in 2009, Chinese business proved to be one of the few anchors of stability in export trade for German machine and system manufacturers. German machine manufacturers exported more than five billion dollars' worth of machines to China last year according to the German Engineering Federation (VDMA). The Asian country now has around a 10% stake of the entire export business of German machine and system manufacturers. Machines and supplies produced in the West will continue to be in great demand in the Chinese engineering industry due to large numbers of machines that are still out of date. VDMA experts are predicting good opportunities for the future, particularly for machines and systems that make industrial production more effective and more environmentally friendly.

This applies to tool and plastics machinery manufacture, for example. With more than 120,000 CNC machines sold, China became the world's largest market in 2008, with domestic manufacturers now having a stake of more than 50%. Chinese manufacturers have started developing CNC machines in the high-end range too, and are increasing their export business. China also took the number one spot globally for plastic injection molding machines in 2008 with 38,000 units sold. A clear trend toward hybrid solutions is emerging in the country in order to save energy and growth is also being seen in the export trade.

In addition to saving energy, trends in the field of industrial applications include safety, environmental protection, and greater efficiency. Segments likely to experience extraordinary growth in the coming years are renewable energy sources and tunnel boring machines. There will also be significantly greater demand for electro-hydraulics and hybrid solutions. On the other hand, several sectors, such as heavy industry, are already showing signs of overcapacity.

The frequency transformer and machine tool business promises a positive outlook for the field of industrial automation. The trend toward energy-saving applications and the regional development and manufacture of products will also increase in this field too. Growth is expected in the following sectors in particular: automation, automotive, food and packaging, pharmaceuticals, electronics, machine tools, and semiconductors. Projects that integrate automated production processes will be another thing to watch out for.

A Boost from EXPO 2010

EXPO 2010 Shanghai taking place in China from May 1 to October 31, 2010, is set to provide further positive impulses for the country's development. The organizers have chosen "Better City, Better Life" as the theme for the global exhibition. This motto is intended to pick up on people's desire for a better life in the cities of the future, and the need to deliver concepts for sustainable and integrated urban development. While just two percent of people lived in cities in 1800, today this figure is closer to 55 percent and it represents a growing trend. In China, less than 40% of the population currently lives in cities. And yet this country already has 175 cities with over a million inhabitants, seven of which even have populations of more than ten million. In contrast, North America 'only' has 46 and Europe has 60 cities with over a million inhabitants.

Shanghai, this year's EXPO city, is taking a pioneering role in the country's development. With a population of more than 18 million, today it is the world's tenth largest metropolis — and yet up until the middle of the last century China's largest and most important industrial city was still just a small fishing village. Shanghai now boasts the world's third largest port, it is China's key stock exchange center and it operates the only commercially used Transrapid link. Commensurate with its size and its self-image, the People's Republic of China is expecting the world's largest exhibition of all time in Shanghai with 70 million visitors, at least 240 exhibitors, including Germany and its neighboring countries, but also international organizations, such as the Red Cross and the United Nations.

Before the start of EXPO 2010, China confirmed its role as the world's economic powerhouse once again in impressive terms: During the first quarter, growth in the Chinese economy accelerated to 11.9 percent, greatly exceeding expectations once more.

Background Information

Bosch Rexroth in China and at EXPO 2010

Bosch Rexroth has been represented in China since 1978. The company headquarters are in Shanghai with production sites in the capital Beijing, in Wujin in the eastern Chinese province of Jiangsu, and in Xian in the south of the country. In Beijing, the control and drive system specialist manufactures axial piston units, gear and hydraulic solutions for wind turbines, hydraulic valves, hydraulic cylinders, and hydraulic units are manufactured in Wujin, and frequency converters in Xian. There are also sales centers and customer service centers in several Chinese cities.

Technology from Rexroth has already been used in countless projects and has even been involved in a world record. For example, the control and drives systems specialist supplied two high-pressure and axial piston pumps for the drawn concrete pumps on the construction site of the Shanghai World Financial Center, the world's third tallest building. At a height of 492 meters, a new world record was achieved for vertical concrete pumps. Bosch Rexroth also supplied the hydraulics and electrics for a caterpillar crane that carried a load of 900 tons — the largest load ever lifted in Asia.

Powerful hydraulic motors from Rexroth were also employed in the construction of the Qinghai-Tibet railroad, the world's highest-altitude railroad line. And Rexroth supplied complex stage technology to the Theater of the National Center for Performing Arts in China to ensure the 15 elevating platforms of the main stage could be moved extremely quietly and with great precision. Bosch Rexroth is also promoting the technical development of wind energy plants and supports China's efforts to be proactive in its use of renewable sources.

Bosch Rexroth will also be taking center stage at EXPO 2010 in Shanghai: The centerpiece of the German pavilion is a high-tech pendulum that represents Germany's innovative strength and technical expertise, all thanks to technology from Rexroth. From the three galleries above, guests will be able to set a ball suspended from the pendulum in motion and influence its oscillations by making loud noises, such as clapping, shouting and screaming. The grand finalé sees the ball, measuring three meters in diameter and weighing 1.2 tons, completing a perfect circle. The ball's movement is generated by a drive solution that relies solely on robust and precise drive and linear technology components from Rexroth including press ram guides, in some cases with an integrated measuring system, ball screw assemblies, synchronous servomotors, and intelligent IndraDrive servo drives.

You can find further information here

Bosch Rexroth AG is one of the world’s leading specialists in the field of drive and control technologies. Under the brand name of Rexroth the company supplies more than 500,000 customers with tailored solutions for driving, controlling and moving. Bosch Rexroth is a partner for industrial applications and factory automation, mobile applications and using renewable energies. As The Drive & Control Company, Bosch Rexroth develops, produces and sells components and systems in more than 80 countries. In 2008 Bosch Rexroth AG, part of the Bosch Group, achieved sales of around 5.9 billion Euro with 35,300 employees.

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