Editor's note: the Chinese body is the complete transcript of this market analysis. The English text below is an editorial summary of all six chapters and their key data.
Advanced manufacturing gauges a nation's strength; without an advanced instrument industry, China cannot move from a manufacturing giant to a manufacturing power. Qian Xuesen: "Information technology includes measurement, computing and communication — measurement is the key and the foundation." Modern instruments measure and control the material world — the source and a component of the information industry (per the 1999 US Commerce report, the information industry includes computer hardware/software, communication equipment and services, and instruments).
In industry, instruments are a "multiplier": US data (mid-1990s) put instrument output at ~4% of industrial output while leverage on the broader economy reached 66% of social output. Power, refining, chemicals, metallurgy, aircraft and carmaking cannot run safely without measurement and control instruments — about 10% of fixed assets. In research, instruments are the "vanguard": in major projects nearly half of manpower and money goes to instruments; some 38 Nobel laureates in 80 years owed their prizes to instruments (R. R. Ernst: "Modern science advances ever more on the development of advanced instruments"); gene sequencing instruments cut six years from the Human Genome Project; Shenzhou 2–5 carried 185 instrument sets. In the military, instruments are "combat power": precision-guided weapons rose from 8% (Gulf War 1991) to over 90% (Iraq 2003); the US DoD founded an Automated Test Systems executive agency in 1994. Instruments are also society's "materialised judge" — quality inspection, pollution monitoring, drug testing, fingerprints, forensics — and serve education, weather, surveying, traffic, disaster monitoring and medicine: everywhere ("food and clothing, farm and industry, sea land and air"). Developed nations therefore attach great importance to instruments: Japan's science ministry ranks sensors first for the 21st century; Germany grew automated measurement markets 350% in six years of the 1990s, lifting productivity 1.9%; the EU's third framework plan lists measurement among 15 special topics; China's 10th Five-Year Plan states "give instrument development an important position", with NDRC and MOST special programmes.
Products: temperature, pressure, flow, level, mechanical-quantity and display instruments; transmitters; controllers; actuators; pneumatic and electric modular instruments; control devices; industrial control computers; fieldbus smart instruments; smart control network nodes. In 2003 China produced 1.4 million temperature, 3.6 million pressure and 660,000 flow instruments; 250,000 transmitters; 20,000 actuators; 30,000 industrial computers; 90,000 fieldbus smart instruments. Five-year average annual demand: 1.7 M temperature, 4 M pressure, 660 K flow, 350 K transmitters, 280 K actuators, 350 K computers, 180 K fieldbus instruments (Table 1).
Per the former machinery-system classification: analytical, optical, testing-machine and laboratory instruments. (1) Analytical instruments: imports ran at USD 1.19 billion in 2003, up 44.6% — domestic products lag in technology, variety, quality, automation, intelligence and completeness, while demand grows. Main imports: mass spectrometers, NMR, chromatographs, GC-MS, ICP spectrometers, water and gas monitors, fluorescence spectrometers; mid- and high-grade products are 55%/45% of imports. Five-year demand: 60% mid-grade, 25% low, 15% high in oil/chemicals/metallurgy/power; biomedicine needs reliable intelligent automated units; environmental needs 65% low-mid; other sectors 35/50/15. Analytical instruments are the fastest-growing scientific class — "Ninth Five-Year" sales grew over 30% yearly; demand will keep growing fast (Table 2: e.g. electrochemical analysers 25,000 → 35,000 units; chromatographs 9,000 → 12,000; environmental monitors 2,000 → 4,000).
(2) Optical instruments: supply and demand broadly balanced; low/mid grades oversupplied, high grades few and behind imports. 2003 domestic sales RMB 12.95 bn (+41.2%); imports USD 1.69 bn (+125.2%). By 2008 demand reaches 4 million units (binoculars/astronomical telescopes 2 M). Microscopes, surveying instruments, optical metrology, spectrophotometers, refractometers and telescopes remain the high-demand series (Table 3: microscopes 860,000 → 1.05 M; telescopes 1.62 M → 2 M; total 3.15 M → 4 M).
(3) Testing machines: universal hydraulic machines and hardness testers remain volume products, but electronic universal, electro-hydraulic servo, high-frequency fatigue machines and digital hardness testers grow fast; microcomputerised, intelligent, digital, multi-function mechatronic products and complete on-line inspection/quality-control sets will climb. Foreign upgrades outpace domestic products, a quarter of types still absent domestically. 2003 domestic sales RMB 843 M (+6.7%); imports USD 203 M (+21.3%). By 2008 domestic demand tops 70,000 units, mechatronic products 50–60%: metal testing ~18,500; non-metal 17,500; process testing 4,500; force/deformation 2,000; balancing machines 6,000; vibration/impact tables 1,000; NDT instruments 25,000; automotive balancers 1,500 — 1,500 types.
(4) Laboratory instruments: mid/high-grade demand grows fast; with microcomputers, modular complete sets and network control, intelligent laboratory instruments rise. Five years: precision balances ~22,000/yr; environmental test equipment ~25,000 (incl. ovens); calorimeters ~800; large dynamic test systems ~400/yr and small instruments 25,000+; acoustic/vibration 5,000; laboratory centrifuges — large-capacity ~250, bench-top ~1,900.
1.3 billion people, 310,000+ medical institutions — a vast market. China is among the world's ten largest emerging medical markets and Asia's largest outside Japan. Drivers: community health services and rural care lift demand for routine devices; ageing (65+ over 6%) raises growth above the world rate; the disease spectrum shifts from developing to developed patterns; medical insurance reforms curb all-purpose hospitals. 2003 domestic sales topped RMB 7.8 bn (+9.8%); imports USD 993 M (+228%) — X-ray diagnostics, MRI, patient monitors, ECG recorders. Five years: >20% growth in routine diagnosis/treatment devices; 10–15% in ECG, bedside monitors, B&W ultrasound, general X-ray, ventilators, anaesthesia machines, endoscopes, operating lamps; flat for X-CT/MRI/colour ultrasound; negative for X-knife, gamma knife.
(1) Electronic measurement: 2003 domestic sales ~RMB 2.8 bn (+22.4%); imports USD 1.005 bn (+26.7%). With IT a strategic priority, expect 20% annual growth — sales to top RMB 7 bn by 2008; digital TV, DVD and multimedia production add demand. (2) Electrical measurement: after decades the industry meets domestic bulk demand with >95% share; demand shifts to overload-proof, long-life, electronic, digital products with standardisation and value. Induction meters give way to 25–30-year-life, 6×-overload meters; electronic meters grow; remote automatic meter reading is a trend. 2003 sales RMB 11.566 bn (+35.9%); imports USD 215 M (+40.1%). In 3–5 years annual demand tops 60 million units: 48 M energy meters, 7 M panel meters, 2.5 M portable, 1.5 M digital, 1 M others; electronic meters exceed 40% by 2008. Sales grow ~10%/yr — power sector 90% of demand.
With instruments split across 20+ ministries and groups, comprehensive forecasting is hard, but sectors growing over 20% include automotive instruments, environmental instruments, agriculture/forestry/animal-husbandry/fishery instruments, geological and earthquake forecasting, nuclear-radiation measurement, commodity inspection, entry-exit quarantine. Environmental protection is a huge market — 50,000+ monitoring stations, 18,000+ key polluters, municipal and industrial wastewater treatment. 2003 domestic environmental-monitoring instrument sales RMB 1.056 bn (+33%), to RMB 2 bn by 2005 and over 6 bn by 2010. Five years' needs: environmental-quality monitors and automatic systems; flue-gas analysis for coal-fired plants and boilers; surface-water monitoring; pollution-source monitoring and control for sewage plants and high-organic wastewater.
Sensors draw growing attention as automation rises. Development centres on smart sensors: by 2005 demand for bus/smart-instrument pressure, temperature, flow and level sensors; multifunction environmental sensors; aerospace micro-sensors reaches ~500,000 units. Elastic elements lean to special types; counters double in five years in CNC, textile machinery, instruments, cars and motorcycles; connectors grow 15%/yr; ASIC and thick-film circuits are backward domestically but the market is broad (Table 5 details 2003 output and 2008 demand across sensor, elastic-element, counter, connector and special-circuit classes, plus functional materials for automotive, environmental, communication, instrument and other sectors).
(1) Industrial automation instruments and control systems: fully open TCS management-control systems 100 sets/yr; FCS 500 sets; low-cost DCS 1,000+ sets; smart transmitters 100,000; smart actuators (positioners, electric, electro-hydraulic) 50,000; special detection instruments 500,000 (compound-parameter thermometers; high-precision density meters; non-circular-duct gas flowmeters; large-bore twin-rotor flowmeters; high-temperature vortex meters; insertion magmeters; gas flow calibration rigs; on-line oil-flow piston provers; liquid/gas flow switches; multiphase metering; intrinsically safe instruments; high/low-temperature viscous corrosive measurement; metallurgical force devices); special actuators and valves 500,000 (fast electric actuators; Ex electro-hydraulic; nuclear-grade; high-differential valves; fast-trip valves; corrosion/Ex valves; large-bore high-power valves; special ball/butterfly/gate valves); other key control-system equipment tens of thousands (communication, recording, interlock protection, remote diagnosis, smart digital indicators); large-project analysis systems over 1,000 sets/yr (converter gas recovery 20; boiler water/steam 500; gas generation 100; cement kiln exhaust 200; 300-kt ethylene 20; 300-kt ammonia 20; ESP sampling 50); supercritical units' instruments and control — RMB 1.5–2 bn (advanced monitoring; TCS; full-scope simulation; advanced control software); West-East Gas Pipeline — RMB 8 bn (SCADA; Ex pressure/differential transmitters; Ex temperature transmitters; clamp-on ultrasonic flowmeters; Ex actuators); environmental automation 30,000 sets/yr (air/water/sewage/incineration monitoring and SCADA; highway and airport weather; noise and vibration; unmanned stations); industrial control and management software worth 1/3–1/2 of system value (advanced control, TCS software, embedded modules, smart network node software, asset and safety software, application development tools).
(2) Scientific instruments: general and special automatic test systems 10,000 sets/yr; microcomputerised intelligent spectrometers 10,000 (FTIR, quadrupole MS, ion-mobility MS, fully automatic AAS, Zeeman AAS, atomic fluorescence, near-infrared, explosion-proof process GC, portable GC, small ultra-fast UV); on-line analysers 1,000 (on-line FTIR, Raman, water quality); large automated flaw detection 1,000 (multichannel XRF, GIS mobile X-ray, X-ray diffractometry, magnetic and ultrasonic flaw detectors, ultrasonic-eddy-current systems); large testing machines 1,000 (structural test machines; road simulators; vertical dynamic balancers; electro-hydraulic servo universal machines; microcomputerised cement compression machines; on-line hardness/case-depth instruments; vehicle test systems); mechatronic surveying instruments 100,000 (self-focusing levels; laser rangefinders; electronic theodolites and total stations; GPS receivers); bio-engineering instruments 2,000 (gene diagnostic units, DNA synthesisers, magnetic immuno-separation, multi-parameter bio-analysers, new biosensors).
(3) Electronic measurement: digital communication test systems 800+/yr (wireless test — wideband I/Q modulated vector signal generators, N-CDMA transmitter testers, arbitrary waveform generators; optical test — fibre fault analysers, ribbon fusion splicers); digital AV test 250+ (digital TV generators; virtual electro-acoustic analysers); general digital instruments to RMB 2 bn by 2008 (portable/bench scopes; synthesised sources; portable spectrum analysers; intelligent sweepers); high-performance: power-semiconductor curve tracers 300/yr, modulation-domain analysers 300, precision universal counters 800, intelligent scalar network analysers 1,200.
(4) Electrical measurement: electricity-use monitoring and management 1,200 sets/yr (distribution automation — substation and feeder SCADA; unattended substation integrated systems; load control; meter reading and billing — remote infrared reading a key product); high-performance energy meters and load analysers 6 M+/yr (all-electronic, long-life, multi-function, multi-rate, high-accuracy meters, load analysis units); electrical product automatic test systems 1,200 sets.
(5) Medical instruments: endoscope series 1,500 sets/yr (waterproof; electronic); intensity-modulated treatment units 300; MRI 200 (open permanent-magnet; open superconducting); ophthalmic therapy — excimer lasers 200, aberrometers 3,000, phaco emulsifiers 200, A/B scanners 200, slit-lamp image processors 300; ultrasound — 3D Doppler 200, digital high-end B&W B-ultrasound 1,500, high-resolution Doppler array probes 20,000.
(6) Others: ship automation — RMB 1.2 bn by 2008 (navigation, cabin, loading systems; saving USD 120 M+); precision-agriculture environmental control 120 sets/yr (smart greenhouses; water/energy-saving irrigation); urban traffic management above RMB 500 M/yr (traffic SCADA; flow detection and transmission; rail transit monitoring and actuators).
(1) Industrial automation instruments and control systems: A. Relying on major projects — oil, chemicals, steel, power, transport, defence, environmental, light industry, water — develop and industrialise new-generation master systems (DCS, FCS, open PC-based systems): 50% of large systems by 2010, 85% by 2020. B. Advanced control and optimisation software industrialisation: 30% "turn-key" capability by 2010, 50% by 2020. C. Smart instruments, fieldbus instruments, actuators, transmitters, special complete controls: replace 70% of imports by 2010, 85% by 2020.
(2) Scientific instruments: old products renewed by 2010, replacing 50% of imports (75% by 2020), centred on life sciences, agriculture and food, materials, environment and energy. A. General instruments: solve stability and reliability of chromatography, spectroscopy, mass spectrometry, electrochemistry; develop high-sensitivity detectors and sensors. B. Special instruments: farm-product and food-nutrition testing; pesticide residues; soil rapid tests; marine instruments; environmental monitoring and early-warning suites; disaster monitoring; life-science separation and analysis; hospital biochemistry (incl. small hospitals); metrology; aerospace. C. New instruments with independent IP: differential, smart, hyphenated, virtual, imaging instruments and related technologies/components. D. Software and support: application software, standardised data processing, general development platforms and measurement-control data systems.
(3) Medical instruments: replace 50% of imports by 2010, satisfy 70% of varieties by 2020. A. Medical optics — endoscopes, ophthalmic instruments, operating microscopes. B. Digital imaging, high-grade B&W and colour ultrasound and transducers. C. X-ray image processing, open superconducting MRI, clinical information systems. D. High-energy intelligent tumour therapy systems — digital control, high-energy tube technology, radiotherapy simulator upgrades, multi-collimator systems.
(4) Electrical measurement and automatic test systems: A. Precision digital meters, automatic test and system integration, networking — 20% of enterprises with whole-machine automatic test by 2010, 50% by 2020, with online detection, fault diagnosis and microcomputer-based intelligent testing. B. Communication/computer/network measurement, IC test instruments and ATS. C. Microwave and millimetre-wave instruments. D. Digital TV/broadcast/multimedia test. E. Aerospace automatic test systems. F. Exportable instruments — energy meters, digital multimeters.
(5) Metrology instruments: indispensable to product quality and innovation; backward metrology constrains manufacturing. With new high-tech standards appearing internationally and WTO accession, alignment matters — metrology research is part of rejuvenating equipment manufacturing. A. Geometric-quantity online metrology for advanced machinery and microelectronics: vision and other online sensors; photoelectric trackless online CMMs; large-size 3D field calibration. B. Remote calibration — online dynamic calibration and traceability; research on primary standards: temperature quantum devices, current standard (SET), Avogadro-constant-based mass standard.
(6) Sensors, components, processes and materials: A. New bus/smart pressure, temperature, flow, level sensors; multifunction environmental; biosensors; smart sensors; aerospace micro-sensors. B. Components: special elastic elements; counters; ASIC and thick-film circuits; measurement-control modules and plug-ins; plug-in chassis. C. Materials: thin-film, miniaturised, fibrous, powder, composite, multifunctional, material-element integrated, intelligent new materials; nanomaterials; functional ceramics.
(7) Strengthen basic technologies: A. New processes such as MEMS manufacturing; B. Common technologies for stability and reliability; C. System-integration application software; D. Networked measurement-control application technology.
The Chinese text lists 11 references: the 2003 national statistical communiqué; the CAE instrument task force report to the medium/long-term S&T plan (Dec 2003); the China Instrument Industry Association 2003 situation analysis (Mar 2004); the equipment-manufacturing development research report (NDRC, Apr 2002); the instrument treasury-bond special plan (NDRC, Feb 2004); the national expert survey on revitalising the instrument industry (Mar 2001); the MOST feasibility report on scientific-instrument R&D (May 2004); the instrument industry Tenth Five-Year plan (State Bureau of Machinery, May 2000); the scientific-instrument 15-year prospective study (MOST, Sep 1999); the information-product plan electronic-instrument section (CEIA, Feb 2000); and the medical-device Tenth Five-Year plan (CMDI, Feb 2000).
