BMI View : China's construction sector will be driven by an expansion in infrastructure investment over the five - year horizon, prompting us to upgrade our forecast for 2016 and 2017. Over the next decade however , growth will continue to slow in line with a broader shift to a consumption-led growth model.
Latest Updates And Structural Trends
We revised up our forecast for China's construction sector in 2016 and 2017 to 7.1% and 6.9% respectively as the fiscal stimulus and 13th Five Year Plan prompt an uptick in investment in the coming years. We maintain our expectation that growth will slow over the coming decade.
We have updated our data for the sub-sectors of the construction sector with new historic and forecast data to better reflect the volume of industry value generated from the construction of assets. Our new data indicates a larger importance of the roads & bridges segment in the transport sector and the water segment in the energy & utilities industry.
Infrastructure will be a bright spot in China's construction industry over the coming five years, supported by investment into airports, railways and water infrastructure in line with the goals of regional integration and addressing environmental and urbanisation challenges outlined in the 13 th Five Year Plan. Two major driving forces behind infrastructure value - power and roads & bridges, accounting for 45% and 20% respectively, will sustain robust growth over the same period.
China's residential building sector will see growth accelerate in 2016 (to 5%) as greater land supply is made available in an effort to rebalance supply and demand and dampen the overheating housing market. Over the longer term, the pace of growth in China's housing sector remains unsustainable and we therefore do not expect a major expansion in residential building.
|e/f = BMI estimate/forecast. Source: National sources, BMI|
|Construction industry value, CNYbn||4,654.70||5,067.60||5,533.80||6,003.90||6,440.40||6,908.00||7,374.30||7,887.10||8,434.80||9,019.70||9,644.50|
|Construction Industry Value, Real Growth, % y-o-y||6.80||7.10||6.90||6.00||4.80||4.80||4.30||4.50||4.20||4.20||4.20|
|Construction Industry Value, % of GDP||6.5||6.6||6.6||6.6||6.6||6.5||6.5||6.4||6.3||6.2||6.1|
China scores 66.2 out of 100 in our latest Asia Pacific Infrastructure Risk/Reward Index, which places the country 3rd among 21 regional markets.
The country has the third best score globally for Industry Rewards - 75 out of 100 - owing to its industry size, which is the largest globally and the strong growth rates. Strong government support and financing for infrastructure is also bolstering China's score for this component.
The country receives below regional average scores for Country Rewards and Industry Risks, which is indicative of a lack of competitiveness in the infrastructure market (dominated by state-owned firms) and high levels of corruption (which leads to issues with the transparency of the tendering process).
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The China Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's China Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Chinese infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for China to test other views - a key input for successful budgetary and planning in the Chinese infrastructure market.
- Target business opportunities and risks in the Chinese infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in China.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.