China's equipment manufacturing industry faces several critical challenges in achieving sustainable and autonomous development, particularly in the core technologies of major equipment. According to Zhang Guobao, Deputy Director of the National Development and Reform Commission and head of the State Council's Northeast Revitalization Office, the main issues are that core technology manufacturers cannot produce key components, first-time users are hesitant to adopt domestically developed products, and control systems for critical links remain weak. These problems were highlighted during a national meeting on the localization of major technological equipment held on August 28th.
Liaoning Province presented its progress and challenges in developing major equipment, while Li Ye, head of the State Council’s Industrial Group, chaired the event. Attendees included officials from various provinces and ministries, emphasizing the importance of this gathering as the first large-scale exchange since the establishment of the Major Equipment Office under the National Development and Reform Commission.
Zhang Guobao emphasized the urgency of enhancing China's independent innovation capabilities in the equipment manufacturing sector. He pointed out four major factors hindering the autonomy of key technologies:
First, domestic manufacturers still lack the R&D and production capabilities to match global standards, especially in areas like large pumped storage units, where China's capacity lags far behind international levels. Despite some progress, many key components and technologies remain controlled by foreign firms.
Second, many Chinese equipment companies face heavy historical burdens, with outdated systems and limited self-development capabilities. Many are located in old industrial regions and struggle with inefficiencies, poor performance, and talent loss.
Third, user companies often prefer imported equipment over domestic alternatives, creating barriers for first-of-a-kind products. Even when domestic options exist, they are frequently excluded due to lack of operational experience or artificial market obstacles.
Fourth, policy support for localizing major equipment is insufficient. Current import policies make it More cost-effective to purchase complete sets rather than develop locally, which discourages innovation. Additionally, the government's regulatory role has weakened, leading to monopolistic practices and reduced oversight.
To address these issues, the state has introduced new policies, including tax incentives for R&D investment, support for technology absorption and re-innovation, and measures to promote the first use of domestically produced equipment. The government also plans to establish a risk-sharing mechanism for the first sets of domestically manufactured equipment and ensure that at least 60% of equipment in key projects is sourced locally.
These efforts aim to strengthen China's technological independence and build a more resilient and competitive equipment manufacturing industry.
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