Squeezed by China's slowing economy, global mining equipment makers had a hard first half of the year and the situation could get worse as Western heavy machines manufacturers will face a growing threat of competition from Chinese companies.

According to a report published Thursday, in the next five years China’s domestic mining and quarrying equipment manufacturing industry will continue to maintain a rapid growth rate, at an annual average rate expected to reach about 22%.

While mining companies will remain to be under pressure from investors for higher returns, they will invest in technology that can help them maintain margins currently squeezed by high labour, energy costs and weakening commodity prices.

The “China Mining Equipment Industry 2013-2017,” predicts that local manufacturers will emerge as favourites due to their low cost.

Last year, the nation’s mining and quarrying equipment market reached US$57 billion, despite the sector being relatively concentrated. Sales income for Henan, Liaoning and Shanxi, the top 3 provinces of mining equipment manufacturing, accounted for 51% of the total market share in China.

By the end of 2012, there were more than 1,400 mining equipment makers in China, says the report. About 20 of them targeted were large-scale companies and the rest qualified as small to medium size companies.

The report concludes that global mining equipment market will continue to depend on factors such as increasing mining activities in developing countries and the rising demand for technically advanced solutions across the globe.