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...