The year 2006 witnessed a fast growth in China agricultural machinery industry, and the gross industrial output value of agricultural machinery enterprises (excluding agricultural diesel engine and agricultural pump) stood at RMB131.67 billion, with a year-on-year rise of 23.54%.

Agricultural machinery industry experienced a rapid growth in 2006, large-medium tractors and harvesting machinery grew up by 54.1% and 88.7% respectively. Moreover, the yield of rice transplanters doubled and that of rotary tiller, cultivation machine and conservation tillage machinery grew fast as well. However, there was a slow growth for the yield of small-sized tractors, up 2.5% compared to the same period last year, all of which shows that adjusting and optimizing the structure of agricultural machinery has achieved an obvious result. In the meanwhile, the quality and security of agricultural machinery have been greatly improved and after-sale services significantly bettered.

The Year 2006 saw the prosperous sales of agricultural machinery in domestic markets, and the production/sale ratio was up to 97% or more. By region, the markets in the central region and west region started up early and grew rapidly. There is a fast growth for large-medium tractors and combine harvesters in Shandong, Henan, Hubei, Jiangsu, Anhui provinces and Xinjiang Autonomous Region. The sales of agricultural machinery in Shandong province in 1H2006 almost doubled. By category, there was a great demand in the market for medium-sized tractor, head-feed combine harvester, rice transplanter and cultivation machine in South China; large-medium tractors and matching agricultural tools as well as rice field machinery in Northeastern Region of China; and large-medium tractors, combine harvesters and cultivation machinery in the Central China.

In 2006, 100-120 horsepower products were best distributed. The rapid development of large-and medium-horsepower tractors is also incentive to the demand for the matching agricultural machinery like corn combine and rice transplanter widely popularized in the market.

Due to the promising prospect of agricultural machinery industry, a great number of enterprises are marching into this field. Up to now, there have been more than thirty Large- and medium-horsepower tractor producers in China. The excessive production capacity of low-end products led to the fierce competition among enterprises, bringing a negative influence on the agricultural machinery industry. The 2007 national subsidy for purchasing agricultural machinery climbs to RMB 1.2 billion, of which RMB 91 million will be assigned to cultivation regions directly affiliated to the Central Government.

As for the issues of rural economy, rural development and rural demography, the Opinions of the Central Committee of the CPC and The State Council Concerning Several Policies on Promoting the Increase of Farmers’ Income on February 8th 2004; the Opinions of the Central Committee of the CPC and the State Council Concerning Several Policies on Strengthening Rural Work for the Improvement of Agricultural Comprehensive Production Capacity on January 30th 2005; and the Several Opinions of Central Party Committee and State Council on Promoting the Construction of a New Socialist Countryside on February 21st 2006. This shows Chinese Government attaches great importance to the rural issues.

It is mentioned in the Several Opinions of Central Party Committee and State Council on Promoting the Construction of a New Socialist Countryside that efforts should be made to promote the mechanization of the agriculture; to improve the mechanical operation level in major grain producing regions; and to encourage the utilization of energy-saving agricultural machinery and processing equipment, etc., which is undoubtedly conducive to the rapid development of China agricultural machinery industry in the long run.