China’s heavy equipment industry has entered a new growth cycle since the second half of 2024, with excavators, cranes and other equipment sales showing steady recovery. According to data from the China Business Industry Research Institute, China’s construction machinery market size reached 165 billion yuan in 2024, is forecast to reach 189.7 billion yuan in 2025 and 257.3 billion yuan in 2026. On a global scale, China ranked third in construction machinery sales, with 13 Chinese companies on the 2025 Global Construction Machinery 50 Strong list, accounting for 19.13% of total sales.
2. Key Players and Competitive Landscape
Leading Listed Companies
| Company | Ranking (Global) | Key Products | Listed in China | A-Share Code | H-Share Code |
|---|---|---|---|---|---|
| XCMG (徐工机械) | 4th | Earthmoving machinery, cranes, concrete mixers, road machinery | ✅ | 000425 | – |
| Sany Heavy Industry (三一重工) | 5th | Excavators, concrete machinery, cranes | ✅ | 600031 | 06031 |
| Zoomlion (中联重科) | 10th | Concrete machinery, cranes, agricultural machinery | ✅ | 000157 | 01157 |
| Liugong Machinery (柳工) | 18th | Excavators, loaders, road rollers | ✅ | 000528 | – |
| Shantui Construction Machinery (山推股份) | 30th | Bulldozers, road rollers | ✅ | 000680 | – |
Note: In addition to the five companies listed above, eight other Chinese companies made the 50 Strong list, including Lingong Heavy Industries, China Longking, CRCC Heavy Industry, Zhejiang Dingli, Tongli Heavy Industries, Sunward Intelligent, Foton Lovol, and Xingbang Intelligent.
Competitive Landscape Dynamics
The domestic market is highly concentrated, but competition is intensifying. In the large excavator segment, the top four manufacturers’ market share fell from 59.7% in 2024 to 58.7% in the first three quarters of 2025, indicating accelerated industry competition. Citigroup maintains a preference ranking in the sector: Hengli Hydraulic (601100) > Sany Heavy Industry H-shares (06031) > Sany Heavy Industry A-shares (600031) > Zoomlion (01157) > Construction Machinery (600984).
Internationalization has become a key strategy for leading companies. In the latest global ranking, the 13 Chinese companies’ average overseas sales accounted for about 41.94%, with the highest exceeding 70% of total corporate sales.
3. Major Growth Drivers
🏛️ Domestic Policy Support and Infrastructure Investment
China’s active infrastructure investment continues to drive equipment demand. In 2025, approximately 590 billion yuan is planned for building the national railway network, with large-scale projects such as the 180,000 km nationwide rail network generating strong order backlogs and driving demand for large-scale earthmoving machinery, construction equipment and cranes. The 2025 Equipment Renewal Policy issued by the National Development and Reform Commission expands support across industrial, energy, transportation, and agricultural sectors, lowering financing costs through increased interest subsidies.
From a regulatory and FDI perspective, foreign investors seeking to establish factories, warehouses, or acquire high-value equipment in China need to navigate a structured sequence: negative list review, company registration (WOFE/JV), tax registration, SAFE foreign exchange registration, and fixed asset acquisition/compliance. Equipment capital contribution can be used as part of the investment structure.
🌏 “Belt and Road” Initiative Drives Exports
In the first three quarters of 2025, China’s construction machinery exports to Belt and Road countries totaled $20.658 billion, up 11.3% year-on-year, accounting for 47.1% of total exports. Countries along the Belt and Road have strong infrastructure construction needs and high recognition of the cost-performance ratio of Chinese construction machinery, with Chinese companies gradually replacing European and American brands through localized production and services.
Africa is a particularly bright spot—from January to October 2025, China’s exports of construction machinery to Africa reached $7.147 billion, a surge of 49.7% year-on-year.
📈 Export Momentum Continues to Strengthen
Since the start of the 14th Five-Year Plan, China’s construction machinery exports have maintained rapid growth. Export value increased from 20.96billionin2020to60.169 billion in 2025, successively crossing the 30billion,40 billion, 50billion,and60 billion thresholds. The total export volume is approaching the size of the domestic market.
⚡ Electrification and Intelligent Transformation
Electrification is one of the most significant trends. By the end of 2024, China had launched nearly 200 zero-emission construction machinery models, with excavators and loaders accounting for over 80%. In the first five months of 2025, electric loader sales reached 10,904 units, a year-on-year increase of 207.7%; electric mining truck sales hit 848 units, up 178.9%. Companies are accelerating their layout of intelligent equipment, with remote monitoring, predictive maintenance, and unmanned mining solutions as key application scenarios.
Government modernization policies are generating replacement demand independent of new construction projects, creating a dual growth engine of “new infrastructure + equipment renewal”.
4. Key Risks and Challenges
⚠️ Intense Price Competition (the “Neijuan” Dilemma)
The industry is mired in a difficult “internal competition” trap, with low-price sales, free services, and vicious competition weakening corporate profits and industry sustainability.
The vicious cycle manifests in three dimensions:
- Price war deepening — Over the past three years, transaction prices for 20-ton class excavators have cumulatively declined by nearly 20%, leading to a sharp drop in industry average gross margins, with some small and medium-sized enterprises caught in an “increasing revenue but not profit” trap.
- Significant overcapacity — During the infrastructure boom years, engineering machinery enterprises expanded capacity massively, but with slowing economic growth, the equipment demand has declined. The tower crane market has been hit particularly hard, with sales plummeting from 45,000 units in 2021 to only 7,400 units in 2024, a drop of 83%.
- Lack of effective regulation — While the central government has repeatedly emphasized “neijuan” control, with the Government Work Report in March 2025 for the first time including “govern neijuan-style competition,” and the June revision of the Anti-Unfair Competition Law (effective October) explicitly prohibiting below-cost price dumping, there are still no specific laws, policies, or industry standards in place to constrain corporate behavior.
🌐 International Trade Barrier Risks
Trade environments in the US, EU, India, the UK, and elsewhere are becoming increasingly complex, with tariff and non-tariff barriers superimposing upon each other. For example, the EU imposes high tariffs on some Chinese construction machinery products, which could affect the overseas expansion of high-end products. Access to traditional markets is becoming more difficult, while emerging markets present structural opportunities as Belt and Road initiatives continue to advance.
🏚️ Weak Real Estate Sector
Real estate deleveraging has led to temporarily disrupted demand, with developers cutting back on new project starts and equipment procurement—particularly for small machinery and residential construction equipment. However, the increasing diversification of domestic drivers (railways, water conservancy, energy, mining) is gradually mitigating this impact.
📊 Steel Price and Cost Factors
Steel is the primary raw material for construction machinery. In 2025, steel prices generally exhibited a volatile downward trend, ranging around 3,000–3,500 yuan per ton, with an overall year-on-year decline of about 10%. Lower raw material costs provide some margin relief for the industry. However, in 2026, the supply glut in the steel industry is expected to remain the main issue, with prices likely to fluctuate. Demand for machinery-related steel is still positive, but cost pressures still need monitoring.
5. Investment Considerations and Guidance
Key Stock Listing Information
| Company | A-Share Code | H-Share Code | Sales Revenue (2025 Q1-Q3, RMB) | Net Profit (2025 Q1-Q3, RMB) | Net Profit Growth |
|---|---|---|---|---|---|
| XCMG | 000425 | – | 78.157 billion | – | Stable |
| Sany Heavy Industry | 600031 | 06031 | – | 7.136 billion | +46.58% |
| Zoomlion | 000157 | 01157 | – | 3.92 billion | +24.89% |
Overseas investors can access the sector via onshore A-shares through QFII/RQFII or Stock Connect (Shanghai/Shenzhen-Hong Kong), or via H-shares for Sany and Zoomlion. Hengli Hydraulic (601100) is also favored by analysts for its core component positioning.
How to Invest (Practical Steps for Foreign Investors)
Step 1: Market Entry via Stock Connect or Brokerage
For portfolio investment without setting up a China entity, the most direct method is buying A-shares of XCMG (000425), Sany (600031), Zoomlion (000157) via Shanghai/Shenzhen-Hong Kong Stock Connect (eligible non-mainland investors), or H-shares of Sany (06031) and Zoomlion (01157) on the Hong Kong Stock Exchange. These options require no local incorporation.
Step 2: Physical Asset Investment (FDI Route)
For investors seeking to establish or expand physical operations—such as factories, warehouses, or heavy equipment procurement—China requires a structured regulatory sequence:
- Negative List Review — Confirm the target industry permits foreign participation. For high-value fixed asset investment like heavy equipment manufacturing or industrial parks, early industry approval is essential.
- Company Registration — Choose an appropriate corporate structure: Wholly Foreign-Owned Enterprise (WOFE), Joint Venture (JV), or equity participation. Register at the local Administration for Market Regulation (AMR) to obtain a business license.
- Tax Registration — Register with local tax authorities for corporate income tax and VAT. VAT registration is particularly important for fixed asset imports, enabling tax deductions and access to local incentives.
- Foreign Exchange and Capital Remittance — Capital must be remitted via legal banking channels and registered with the State Administration of Foreign Exchange (SAFE). Large payments for land acquisition, factory construction, or equipment import require formal documentation including contracts, invoices, and remittance proofs.
- Fixed Asset Acquisition — Obtain construction permits, environmental approvals, fire safety certifications, and occupational safety compliance. Equipment procurement, particularly imported machinery, must comply with customs regulations and import licenses.
Step 3: Regional Manufacturing Hub Strategy
Heavy equipment manufacturing is concentrated in specific clusters: Shandong excels in hydraulic excavators and earthmoving systems, leveraging proximity to raw materials and forging infrastructure; Guangdong (Foshan/Guangzhou) leads in automated steel fabrication and precision engineering (hydraulic systems, parts); Qingdao has evolved into a center for integrated building solutions. These regions collectively produce over 70% of the nation’s heavy equipment. Cost savings of 20–35% compared to Western equivalents are achievable.
Step 4: Supplier Due Diligence and Contract Safeguards
For cross-border equipment procurement, comprehensive due diligence is critical to mitigate risks from quality disputes to payment defaults. Key measures include:
- Pre-contract verification of supplier export experience and third-party inspection records
- Clauses addressing quality standards, delivery timelines, payment terms, and dispute resolution mechanisms
- Phased ordering strategy — starting with pilot batches to evaluate quality before scaling
Step 5: Tap into Policy Incentives
China’s Large-scale Equipment Upgrades and Consumer Goods Trade-ins policy extends equal support to both domestic and foreign-funded enterprises. Foreign investors can benefit from the same policy backing as local companies.
6. Financial Performance Snapshot (2025)
First Half 2025
Among the ten leading Chinese construction machinery listed companies, nine achieved year-on-year profit growth. Sany Heavy Industry led in both net profit and growth rate, ranking first. XCMG remained the industry’s largest player by revenue, though its profit and growth lagged behind Sany’s. Zoomlion showed the fastest profit growth among the top three.
Sany‘s advantage came from aggressive overseas expansion, with international sales accounting for over 60% of total revenue in H1 2025, and gross margins approximately 9 percentage points higher than in the domestic market. XCMG‘s overseas revenue rose 16.6% to 25.55 billion yuan, making up nearly half of total sales. Zoomlion‘s overseas business expanded strongly, with Africa sales soaring 179%.
First Three Quarters 2025
Among 16 surveyed construction machinery companies (including XCMG, Sany, Zoomlion, Liugong, and Shantui), nearly 70% achieved double-digit growth in both revenue and net profit. XCMG ranked first with revenue of 78.157 billion yuan. Sany achieved net profit of 7.136 billion yuan, a growth rate of 46.58%. Zoomlion achieved net profit of 3.92 billion yuan, up 24.89%, with profit growth significantly exceeding revenue growth.
Hengli Hydraulics and Aidi Precision both achieved double-digit profit growth, reflecting positive coordination between OEMs and core component suppliers.
Key recurring themes in company reviews include “positive performance growth,” “improved profitability,” and “increased overseas revenue share” — confirming that overseas markets are the main driver of performance growth.
7. Conclusion and Strategic Takeaways
The Chinese heavy equipment industry is at a critical inflection point of recovery and transformation. Domestic policies and Belt and Road initiatives provide steady demand, while electrification and export growth bring new opportunities. However, fierce domestic price competition and international trade barrier risks require investors to take a prudent approach.
Core investment logic:
| Factor | Outlook |
|---|---|
| Domestic market | Recovery and gradual expansion, supported by infrastructure investment and equipment replacement policies |
| Export momentum | Strong, with Belt and Road and African markets as key growth engines |
| Industry trends | Electrification + intelligence, with electric penetration accelerating rapidly |
| Leading players | Internationalization strategy boosting profitability and market share |
| Core risks | Overcapacity, price wars, international tariff barriers |
Investors seeking exposure to this sector can consider positioning through market leaders with strong international presence (Sany, XCMG, Zoomlion) and profitable niche players (Hengli Hydraulic, Zhejiang Dingli). A “going global” strategy that captures growth in emerging markets while benefiting from domestic policy support appears to offer the most favorable near-term opportunity set.
