Core Insights - The hydraulic system is a critical component of construction machinery, acting as its "muscle" by transmitting pressure through liquids to perform various tasks [1][10] - The market size of China's construction machinery hydraulic system industry is projected to grow from 24.477 billion yuan in 2016 to 41 billion yuan in 2024, with a compound annual growth rate (CAGR) of 6.66% [11] - By 2025, the market size is expected to reach 43.747 billion yuan, driven by increased investment in major engineering projects and the transition towards intelligent and green manufacturing [11] Industry Overview - The hydraulic system consists of power components (pumps), actuating components (cylinders and motors), control components (valves), auxiliary components (oil tanks, pipelines, seals), and hydraulic oil [4][10] - Hydraulic systems can be classified into open, closed, and semi-closed systems based on their degree of closure [6][7] Market Dynamics - The construction machinery hydraulic system industry has seen a significant increase in demand due to ongoing infrastructure development, urbanization, and advancements in industrial automation [11] - In 2022, the construction machinery industry faced challenges with a revenue drop to 797.7 billion yuan, a 12% year-on-year decrease, but is expected to rebound to 876.6 billion yuan in 2024 [9] Policy Support - Various policies have been implemented to support the hydraulic system industry, including plans to accelerate the replacement of outdated equipment and promote innovation in the sector [8] Industry Chain - The upstream of the hydraulic system industry chain includes raw materials such as steel, cast iron, non-ferrous metals, and rubber products, which are essential for production [9] - The midstream involves the research, production, and sales of hydraulic components, while the downstream focuses on applications in construction machinery [9] Key Companies - Notable companies in the hydraulic system industry include Eddie Precision Machinery, Hengli Hydraulic, and Changling Hydraulic, which are making strides in technology and market presence [2][13] - Eddie Precision has become a leading manufacturer of hydraulic components, with a revenue of 2.374 billion yuan in the first three quarters of 2025, reflecting a 16.49% year-on-year growth [14] - Hengli Hydraulic reported a revenue of 7.79 billion yuan in the same period, with a 12.31% increase [15] Future Trends - The hydraulic system industry is expected to advance towards integration with electromechanical systems and smart technologies, enhancing operational precision and efficiency [16] - There will be a focus on energy efficiency and sustainability, with the adoption of variable pumps and eco-friendly hydraulic fluids [16] - Customized solutions tailored to specific operational environments will become increasingly important as the industry addresses diverse application needs [17]