Construction in China to Rise 9.4% Annually Thru 2015, Driven in Part By Utilities Development

July 21, 2011

Construction expenditures in China are expected to rise 9.4 percent per annum in real terms through 2015, according to a report by The Freedonia Group. Gains are expected to be

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Construction expenditures in China are expected to rise 9.4 percent per annum in real terms through 2015, according to a report by The Freedonia Group. Gains are expected to be bolstered by a growing domestic economy, ongoing urbanization and industrialization, rebounding foreign investment funding, continuing efforts to expand and upgrade physical infrastructure, and rising income levels. The three major construction segments — residential buildings, nonresidential buildings and nonbuilding structures — each accounted for approximately one-third of total spending in 2010.

Freedonia says the nonbuilding construction sector will advance 10.1 percent annually in real terms through 2015. Government spending initiatives are the predominant drivers of nonbuilding construction activity. Freedonia believes growth will benefit from state-led efforts to expand and upgrade the country’s transportation infrastructure such as highways, railways and subway systems, and airports. Utilities construction will also contribute to nonbuilding construction spending gains, as the government continues to increase the country’s power generation capacity and improve electricity transmission networks, as well as expand and improve municipal water supply coverage and gas distribution.

Nonresidential building construction expenditures are forecast to rise 8.3 percent per year in real terms through 2015. Growth will be driven by strong increases in construction spending on commercial and office applications, spurred by a growing services sector as well as rising personal income levels. However, a moderation in growth in the manufacturing sector is expected to restrain gains, and nonresidential building construction spending will increase more slowly than both the nonbuilding and residential building segments.