Demand for machine tools in China is projected to grow 14.2 percent annually to 389 billion yuan in 2014. This strong growth will bolster China's current position as the world's leading consumer and producer of machine tools. Both supply and demand will benefit from a number of government policies set forth in the Twelfth Five-Year Plan. Economic goals in the Plan that are especially salient to the machine tool industry are the development of Strategic Emerging Industries (SEIs) which will receive beneficial govenrment treatment and the push for "Indigenous Innovation." These and other trends are presented in Machine Tools in China, a new study from the Beijing office of The Freedonia Group, Inc., an industry market research firm.

High-end equipment manufacturing is designated as one of the SEIs and will be extensively promoted by the Chinese government. Advanced machine tool manufacturing is an important segment of high-end equipment manufacturing, and as such, the industry will benefit from subsidies offered by both the central and local governments for research and development. Sales of high-end machine tools will also benefit from favorable tariff policies that will promote the sales of domestic products.

China plans to be an innovation-oriented society by 2020 and a variety of megaprojects have been introduced to achieve the goal, including the development of computerized numerical controlled (CNC) machine tools which will focus on serving key industries, such as aviation equipment, ship building, motor vehicles and generating equipment.

The major markets for machine tools in China are industrial machinery and equipment, transportation equipment, primary and fabricated metals, and electrical and electronic equipment. Industrial machinery is the largest market for machine tools due to the extensive use of various machine tools in numerous segements of the industry. Transporation equipment manufacturing, the second largest market has been supported by the explosive development of the automobile industry in China over the past decade.

Metal cutting machine tools form the largest product segment, which is about three times larger than the metal forming segment. Demand for machine tool accessories is projected to increase at an annual rate of 16.1 percent to 2014, faster than both metal cutting and metal forming machine tools.