HONG KONG Jan 3 Caterpillar Inc,
the world's largest heavy machinery maker, has forecast China's
construction equipment market to grow 10 percent in 2012 and the
yuan to strengthen versus the U.S. dollar.
China, the U.S. company's largest market, would continue to
grow at a "fairly significant" rate for the foreseeable future,
said Group President Richard Lavin ahead of the Asian Financial
Forum 2012 to be held in Hong Kong on Jan. 16-17.
"As far as our future in China is concerned, we are upbeat
and bullish," Lavin told the Hong Kong Trade Development Council
(TDC), organiser of the Asian Financial Forum, in an interview
Industry growth for construction equipment was expected to
rise by about 10 percent in 2012 from 2011, he said.
In China, Caterpillar is one of several heavy machinery
makers looking to grow rapidly, with investments in a spate of
projects, from residential to infrastructure development.
China's construction machinery market sales totalled 435
billion yuan in 2010 and were estimated to rise about 15 percent
in 2011, said Jefferies analyst Julian Bu.
However, China's fixed-asset investment is expected to slow
in 2012 which could affect construction machinery sales growth,
"We expect sales could fall about 15 percent and back to
2010 levels," Bu said.
Lavin warned in November that there would be overcapacity in
China in 2012 and 2013 and that the company expected to see
price pressure there.
Caterpillar expects China's gross domestic product to
maintain an 8.5 percent to 9 percent growth rate in 2012 and
industry growth was seen in line with GDP growth.
"So the infrastructure market if you will, the construction
market we think will be very good," Lavin said.
Caterpillar's forecast was in line with the Chinese Academy
of Social Sciences, China's think tank, which forecast GDP to
rise 8.9 percent in 2012 against an estimated 9.2 percent gain
The U.S. giant also sees opportunities in China's mining
industry. It made an offer in November to buy ERA Mining
Machinery Ltd for up to $885 million to strengthen its
Lavin also said he expected the Chinese yuan to continue to
strengthen against the dollar and other global currencies,
without giving a precise forecast.
Caterpillar would continue to explore China's offshore yuan
market in Hong Kong, Lavin said. Caterpillar raised about $500
million via two issues of yuan-denominated bonds, or dim-sum
bonds, in Hong Kong last year.