For signs of how China’s ambitions to become a self-made, high-tech industrial powerhouse are faring, look to Japan Inc.
The shipment values of Japan’s machinery sector are set to hit record highs, according to Goldman Sachs Group Inc. analysts. Orders placed by Chinese companies for Japanese machine tools have been rising since June and have picked up pace; same for the sector’s general segment. Sales of factory automation equipment are expected to exceed previous peaks.
That's a reversal from the last two years of Chinese rivals grabbing market share as Beijing doubled down on a drive to increase high-end manufacturing, moving away from the mass market, low-margin goods churned out for the last few decades. Chinese makers of all types of machinery and equipment were nudging out typically upper-end Japanese firms, which warned of waning demand from China and uncertainty around it. Meanwhile, the government’s fiscal stimulus helped buoy sentiment for construction-related machinery like hydraulic excavators, where Japanese companies had a firm footing.