Construction Expenditures in China to Increase 8.8 Percent

Cleveland, Ohio - Construction expenditures in China will increase 8.8 percent per annum in real terms through 2016. Although growth will decelerate from the rapid 2006-2011 pace, the country will continue to outperform other major national construction markets. Ongoing urbanization and industrialization, rebounding foreign investment funding, rising personal income levels, and further population and household growth will all work to drive gains. However, further growth will be prevented by a slowdown in the Chinese economy through the forecast period, especially in fixed asset investment. These and other trends are presented in Construction Outlook in China, a new study from the Beijing office of The Freedonia Group, Inc., a Cleveland-based industry research firm.

Construction expenditures in China are about equally split among the residential building, nonresidential building, and nonbuilding construction segments, each of which accounted for around one-third of total construction spending in 2011. Nonbuilding construction will be the fastest growing segment through 2016, with expenditures climbing 9.5 percent annually in real terms. Growth will benefit from state-led efforts to expand and upgrade the country’s transportation infrastructure, which includes a national high-speed railway and the “7918 Network” national highway system. Construction of utilities, including power generation and water supply facilities, will also contribute to nonbuilding construction spending gains.

Residential building construction will advance at an 8.5 percent annual pace in real terms through 2016, primarily spurred by rising personal income levels, household growth, and continuing urbanization. Government efforts to improve living conditions for low-income earners (including the construction of affordable and low-rent houses in urban areas and subsidies for alterations of dilapidated farmhouses in rural areas) will also help drive gains in residential building construction spending.

Nonresidential building construction expenditures are forecast to rise 8.3 percent annually in real terms through 2016. Advances will be driven by robust increases in consumer spending -- both in China and abroad -- for Chinese manufactured goods and services. These increases will spur domestic and foreign direct investment in plants, warehouses, commercial buildings, and shopping complexes.

                                                                                                                                               

CONSTRUCTION EXPENDITURES IN CHINA

(billion 2010 yuan)

 

% Annual Growth

Item     

2006

2011

2016

2006-

2011

2011-

2016

 

 

 

 

 

 

Construction Expenditures

4983

10780

16400

16.7

8.8

Residential Building

1691

3560

5360

16.1

8.5

Nonresidential Building

1780

3740

5560

16.0

8.3

Nonbuilding

1512

3480

5480

18.1

9.5

 

 

 

 

 

 

 © 2012 by The Freedonia Group, Inc.

Construction Outlook in China (published 07/2012, 239 pages) is available for $5500 from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, please contact Corinne Gangloff by phone 440.684.9600, fax 440.646.0484 or e-mail [email protected]. Information may also be obtained through www.freedoniagroup.com.

Source: The Freedonia Group

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