China aims to add over 25% investment for industrial equipment upgrades by 2027

The Chinese government has published specific goals and measures for industrial equipment upgrades in the latest attempt to expand effective investment and develop new quality productive forces.

According to an action plan jointly published by seven government departments, including the Ministry of Industry and Information Technology, the country will increase investment in industrial equipment by more than 25 percent by 2027.

And before 2027, the penetration rate of applying digital tools in R&D in major enterprises will exceed 90 percent, and more than 75 percent of key production processes will be numerically controlled, according to the action plan.

The document clarified that the focus of the plan is to accelerate the building of the modern industrial system and develop high-end, intelligent and environmentally friendly modern industries.

The action plan put stress on removing outdated equipment in sectors such as agriculture, construction machinery and electric bicycles. It encouraged high-tech companies in the fields of aviation, photovoltaics, power batteries and biological fermentation to be upgraded to more advanced equipment with higher efficiency and reliability.

It also emphasized digital transformation, saying the equipment upgrade will be promoted in areas such as numerically controlled machine tools, industrial robots and smart logistics. Smart factories will experience faster development with the intensive use of new technologies such as artificial intelligence, 5G and edge computing, the document said.

Meanwhile, the plan highlighted the expansion and application of energy-saving and environmentally friendly equipment in key industries such as construction, steel and nonferrous industries. In addition, there will be more widespread use of solid waste treatment and water-saving equipment in industries such as petrochemicals, textiles, papermaking, leather, and food.

The plan has pledged greater fiscal and financial support for the industrial equipment upgrades, saying there will be preferential tax policies for equipment that are environmental friendly and intelligent, and special re-lending programs will also be set up for technological innovation and upgrades. In addition, financial institutions will also be guided to strengthen middle and long-term credit support for equipment upgrades.

China has been advocating equipment renewal and trade-in of consumer goods after a meeting by the Central Commission for Financial and Economic Affairs (CCFEA) in February. It has made intensive arrangements with nine central government departments including the Ministry of Commerce, jointly publishing a notice on improving China's recycling system in late February and the State Council making detailed arrangements in March for its implementation.

Experts say industrial equipment and durable consumer goods in China have vast space to be replaced and the initiative could not only stimulate consumption and investment but could also improve resource allocation, contributing to the green and sustainable development of industrial structures.

Official data indicates a great demand for equipment renewal in China. According to Zheng Shanjie, head of the National Development and Reform Commission, equipment investment in China's industrial, agricultural and other key areas was about 4.9 trillion yuan ($681.3 billion) in 2023, and he estimated that updating the equipment would create a huge market with an annual scale of more than 5 trillion yuan (about $695 billion).