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Construction Outlook in China
Expenditures to rise nearly 9% annually through 2018
Construction expenditures in China are expected to rise 8.9 percent per annum in real terms through 2018. Ongoing industrialization, increasing urban population, expanding foreign investment funding, rising personal income levels, and further population and household growth will all work to drive gains in construction activity in China. In addition, government’s effort to improve the county’s infrastructure, expand municipal utilities, and balance regional economy disparity will also aid growth in construction spending. However, further growth will be constrained by a slowdown in the Chinese economy through the forecast period, especially in fixed asset investment.
Domestic spending on manufactured goods to fuel nonresidential building
Nonresidential buildings represented the largest segment of construction market in China, accounting for 38 percent of total construction spending in 2013. Further advances will be driven by robust gains in consumer spending for manufactured goods and services from both at home and abroad, accommodative government policies and investment on transportation and energy infrastructures, such as power generation plants and airports, and greater foreign direct investment.
Government efforts, change in demographics to bolster residential construction
Residential construction expenditures accounted for slightly over one-third of overall construction spending in China in 2013. Residential building construction activity will be spurred by rising personal income levels and household growth as well as population migration from rural to urban areas in China. Government efforts to improve living conditions for low income earners (including construction of affordable and low rent houses in urban areas and subsidies for alterations of dilapidated farmhouses in rural areas) will also bolster residential building construction spending.
Northwest region to grow most rapidly
Although China is a single country, it consists of numerous distinct regional markets characterized by different climates, populations, and levels of economic development. Construction expenditures in the Northwest region are expected to enjoy the fastest growth of any region in China, growing nearly ten percent per annum in real terms through 2018. Gains will benefit from the government’s “Great Western Development” strategy and the abundant natural resources, which will result in sizable increases in spending on infrastructure and manufacturing facilities in this area. However, the Central-East region, being home to about one-third of the country’s total population and economic output, will remain the largest regional market, accounting for 43 percent of the overall construction spending in China in 2018
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