In recent years, China's machine tool industry has played an increasingly crucial role in the world machine tool industry. Last month, China became a net exporter of machine tools. In 2007, China's machine tool exports topped 5 billion yuan, or US$726 million, an increase of 36.2 percent from 2006.

In the aspect of output value, China has accounted for one-quarter of the world's machine tools, according to a report from Research and Markets last month.

The industry's total output last year was 274.77 billion yuan ($39.87 billion), up 35.5 percent from 2006, and is attributed to aggressively expanding overseas markets through acquisitions in addition to increased spending on research and development (R&D), according to the China Daily.

Over the past four years, China's machine tool output value ranked third in the world and first in terms of consumption. In 2007, the country manufactured 600,000 machine tools. Of those, only about 20 percent were CNC machine tools, China Machine Tool & Tool Builders Association founder and honorary chairman Liang Xunxuan told the state-run newspaper.

The number of CNC machine tool companies, with an annual production capacity of more than 1,000 machine tools, has reached 28, and those with an annual capacity of more than 100 machine tools reached 130 in China by the end of last year.

In last month's China Machine Tool Industry Research 2008, Research and Markets reported:

China's machine tool industry is expected to slow down, but, on the other hand, high-value-added products such as NC machine tool, large and heavy machine tool will still keep a strong growth, especially the state key projects and 16 major science and technology projects will boost the domestic demand for high-technical NC machine tool. China is expected to maintain a strong demand for NC machine tool in the next three to five years; in particular the large-scale NC machine tools will remain a 30 percent growth.

Currently, many Chinese machine tool manufactures are "vigorously developing the medium- and high-grade CNC machine tools to make their products more competitive in the global market," China Daily reports.

Dalian Machine Tool Group Corp. (DMTG), which has made overseas acquisitions, purchased two American machine tool factories and bought total property rights for them, is also spending heavily on R&D to try to improve its competitiveness in the global market.

"Ninety-nine percent of our products are independently developed machine tools," DMTG Vice President Jiang Huaisheng told China Daily. "Our output value was about 11 billion yuan ($1.6 billion) in 2007 and computerized numerically controlled (CNC) machine tool products accounted for approximately 45 percent of it.

"We put about $58 million into researching CNC machine tools. The investment will increase next year," Jiang continued

Besides mergers and acquisitions, the domestic machine tool producer has also formed five joint ventures with world-leading machine tool makers.

According to Liang, state-owned enterprises represent 30 percent of China's machine tool and manufacturing industry, while the private sector has a 60 percent share.