Industry growth depends on the growth in investment in real estate and infrastructure. Construction machinery is the construction machinery. The growth rate of demand for construction machinery depends on the investment in various projects, and various projects can be attributed to two types of real estate development projects and infrastructure construction projects. Therefore, the growth rate of the construction machinery industry depends on the investment in real estate development. and the growth rate of investment in various types of infrastructure construction. At the same time, since the total investment of these two types of projects accounts for the vast majority of the investment in fixed assets, the growth rate of investment in fixed assets can basically be used to replace the total growth rate of the two.

In the first three quarters of 2007, the domestic construction machinery industry maintained a prosperous state. In the first three quarters, domestic real estate development investment and various infrastructure construction investments maintained rapid growth, which made the domestic construction machinery market capacity continue to grow rapidly, and the domestic sales of domestic construction machinery enterprises grew rapidly. In addition, the export of domestic enterprises continued to grow rapidly in the first three quarters. Taken together, the sales revenue of the industry continued to grow rapidly in the first three quarters, with a growth rate of 48.7%. In the first three quarters, the overall gross profit margin level of the industry continued to improve, from about 18% at the end of 2006 to about 20%. The domestic construction machinery industry will continue to grow rapidly for 10-15 years. By examining the development experience of Japan's construction machinery industry, we find that the current domestic development environment of the domestic construction machinery industry is very similar to that of Japan in the 1950s and 1970s. We expect that the market capacity of domestic construction machinery may also grow at a high rate for at least 10-15 years. At the same time, it is expected that the share of domestic enterprises in the domestic market is unlikely to decrease in the next ten years. Therefore, the domestic sales of domestic enterprises are expected to maintain rapid growth in the next ten years. In addition, due to the high cost performance factor, the export of domestic enterprises is also expected to grow rapidly for many years. Therefore, it is expected that the high growth of the domestic construction machinery industry can continue for at least 10-15 years. The following figure is the brief logic of the continued high growth of the industry: Macroeconomic regulation, steel price fluctuation, RMB appreciation, and the merger of the two taxes: Macroeconomic regulation, steel price volatility, RMB appreciation, and the merger of the two taxes are the four most important factors affecting the development of the industry at present ( or risk factors). We believe that: the influence of macro-control on the construction machinery industry is gradually weakening; the increase in steel prices is expected to be partially offset by the increase in gross profit margin and the rapid expansion of production and sales; the short-term impact of RMB appreciation is extremely limited, but the long-term is positive; the new corporate income tax law is short-term The impact is small, and the long-term impact may be large.