Construction in China – Key Trends and Opportunities to 2023

2019-11-04
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Published : Nov-2019
No. of Pages : 50

Construction in China – Key Trends and Opportunities to 2023

Summary

China’s construction industry is expected to expand at a relatively slower pace over the forecast period (2019-2023), as the government steadily shifts away from a policy of driving economic growth by investing huge sums in infrastructure developments. The heady days of double-digit growth in China’s construction industry have long gone, with the authorities reining in excessive debt-driven investment in infrastructure and urban development. Nevertheless, in view of the recent slowdown in construction, the authorities can still revert to infrastructure investment to prop up the industry and support the economy when necessary.

The construction industry in China grew by 4.5% in real terms¬ in 2018, up marginally from 4.3% in 2017. This growth was driven by investment in real estate and an increase in fixed asset investment. In 2018, fixed-asset investment grew by 5.9% compared to 2017, and the National Development and Reform Commission (NRDC) approved 189 fixed-asset investment projects, particularly in the energy, transport and water infrastructure sectors.

Growth will be supported by the government’s efforts to boost its spending on infrastructure to counter economic slowdown caused by the ongoing trade tensions with the United States. In August 2019, the US president imposed a 10% tariff on Chinese goods worth US$300 billion, effective from September 1st, 2019, which he further raised to 15%. Moreover, he also raised tariffs from 25% to 30% on Chinese goods worth US$250 billion, effective from 15th October 2019. The escalating trade tensions between the two countries is expected to affect China’s exports, thereby hurting its economy and manufacturing industries. To support businesses and boost the slowing economy, in November 2018, the government announced plans to boost spending, open the Chinese market to international markets and cut value added taxes (VAT) for households and businesses. In March 2019, the government reduced VAT on the transport and construction industries from 10% to 9%, and the manufacturing sector from 16% to 13%, effective from 1st April 2019.

The industry’s output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 4.54% over the forecast period, compared to 5.69% during the review period.

Key Highlights

– GlobalData expects the infrastructure construction market to register a forecast-period CAGR of 10.68% in nominal terms, driven by the government’s focus on developing the country’s railway network to contribute to its economic growth. The government announced plans to invest CNY800 billion (US$117.2 billion) on the country’s railway projects in 2019. The government plans to increase the capacity of new railway lines in the country by 45.2%, going from 4,683km in 2018 to 6,800km in 2019; of this total, 3,200km will be high-speed railway lines.
– Energy and utilities construction market’s growth over the forecast-period will be driven by the government’s focus on developing renewable energy infrastructure in the country, in order to meet its renewable energy target of 35% of electricity consumption by 2030. In January 2019, the government approved 24 offshore wind power projects in Jiangsu Province; these projects have a combined capacity of 6.7GW and involve a total investment of CNY122.2 billion (US$17.9 billion) by 2020.
– GlobalData expects the residential construction market to account for 43.3% of the industry’s total value in 2023, driven by the ongoing urbanization and the government’s efforts to renovate aging urban residential buildings. The government plans to renovate 2.89 million homes in the urban areas in 2019; of the total, 2.07 million homes were renovated during January-July 2019.
– Forecast-period growth in the institutional construction market will be driven by the government’s focus on addressing the rising demand for healthcare services in the country, and improving access to better healthcare facilities. The government expects the country’s healthcare market to grow from CNY5.1 trillion (US$0.8 trillion) in 2017 to CNY8 trillion (US$1.2 trillion) in 2020, and CNY16 trillion (US$2.4 trillion) in 2030.
– The total construction project pipeline in China – as tracked by GlobalData, and including all mega projects with a value above US$25 million – stands at CNY21.4 trillion (US$3.2 trillion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards late-stage projects, with 77.4% of the pipeline value being in projects in the pre-execution and execution stages as of November 2019.

GlobalData’s Construction in China – Key Trends and Opportunities to 2023 report provides detailed market analysis, information and insights into the Chinese construction industry, including –
– The Chinese construction industry’s growth prospects by market, project type and construction activity
– Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Chinese construction industry
– Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in China. It provides –
– Historical (2014-2018) and forecast (2019-2023) valuations of the construction industry in China, featuring details of key growth drivers.
– Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
– Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
– Listings of major projects, in addition to details of leading contractors and consultants

Reasons to buy

– Identify and evaluate market opportunities using GlobalData’s standardized valuation and forecasting methodologies.
– Assess market growth potential at a micro-level with over 600 time-series data forecasts.
– Understand the latest industry and market trends.
– Formulate and validate strategy using GlobalData’s critical and actionable insight.
– Assess business risks, including cost, regulatory and competitive pressures.
– Evaluate competitive risk and success factors.

Filed in: Manufacturing
Publisher : GlobalData
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