"Private firms, instead of State-owned ones, are the most dynamic participants in the machinery industry, contributing greatly to pushing the sector to grow at a mild level when restructuring went on," Cai said.

Nevertheless, he cautioned that difficulties which slashed machinery makers in 2011 still existed, citing sluggish domestic demand as a major one.

The sector's profits from main business grew only 13.8 percent year on year in 2013, while the profit ratio slipped to 6.57 percent, indicating an unsatisfactory situation for real economy, the note said.

In addition, factors such as increasing difficulties in exporting, surging accounts receivable, rising workers' salaries and environmental costs impacted China's manufacturers.

The machinery industry experienced a decade of booming development from 2001, when annual revenue growth stood at no less than 25 percent. The prosperity brought about high confidence among manufacturers, but on the other hand it also hid risks that would pose a major threat when the growth rate slowed.

Following the slow economic growth in 2011, enterprises began to suffer from oversupply and homogeneous products that led to bankruptcies.

Overcapacity still lingers and firms with outdated capacity keep going bust, but competitive machinery makers have started to stand out as the sector is likely to see further polarization.

"The sector will brace itself for development at a more appropriate growth rate after years of adjustment," Cai said, "Stabilizing growth from the bottom is expected."

He forecast the growth rate for production and profit both at 12 percent in 2014, while the increase in exports will reach around 8 percent.

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