(Yicai) Aug. 7 -- China's machinery industry saw a 6.3 percent decline in profit in the first half of the year.

Profits at Chinese machine industry enterprises with an annual turnover of at least CNY20 million (USD2.8 million) fell 6.3 percent to CNY735.2 billion (USD102.3 billion) in the six months ended June 30 from a year earlier, according to data released today by the China Machinery Industry Federation. Their revenues rose 1 percent to CNY14.2 trillion (USD1.98 trillion).

In comparison, profit at industrial companies above the designated size widened 3.5 percent to CNY3.51 trillion (USD485 billion) in the period, the National Bureau of Statistics announced on July 27. Their revenue jumped 2.9 percent to CNY64.86 trillion.

The main reasons for the machinery industry's profit decline are soft demand and inadequate orders, which caused fierce competition and falling prices, resulting in narrowed profits, said Luo Junjia, executive vice president of the CMIF. Moreover, firms had high receivables, with difficulties in recovering them, he added.

The foreign trade value of the Chinese machinery industry rose 4.1 percent to USD557.9 billion in the first half from a year earlier, while related trade surplus soared 8.9 percent to USD271.2 billion, according to data from the General Administration of Customs.

Despite the improvements, the machinery industry is facing relatively more uncertainties overseas, Luo pointed out. Products that logged high export growth before, such as tractors, excavators, lithium-ion batteries, and photovoltaic products, all saw a decline in export value in the first half.

In addition, more and more machinery products have been targeted by international trade disputes, he noted. For example, the United States imposed additional tariffs on China-made electric vehicles, batteries, and ship-to-shore cranes.

At the same time, more domestic favorable policies, such as trade-in policies, are being implemented, Luo said. The machinery industry has opportunities and challenges for development, but the former are more than the latter, he believes.

The machinery industry is likely to continue achieving stable growth in the second half of the year, Luo predicted. The industry's major indicators for the whole year are set to expand more than 5 percent, with external trade remaining basically stable.

Editors: Shi Yi, Futura Costaglione