BMI View : China's construction sector will continue to see a structural d slowdown as the country shifts from an unsustainable investment driven model, to one that is more consumption-led. Opportunities remain substantial, given the country's large infrastructure deficit and ongoing reforms to spur private investment and improve regional connectivity through its One Belt One Road initiative.
Latest Updates And Structural Trends
We forecast China's construction sector to grow by an annual average of 4.3% between 2016 and 2020 in real terms, a significant slowdown from the 7.9% registered between 2011 and 2015.
The real estate sector will remain a key drag on growth, with FAI into the sector seeing a consistent slowdown in growth rates over the past two years. Growth of FAI into real estate was 3.4% for the period Jan-Oct 2015, showing significant weakness relative to the 12.4% registered over the same period last year.
MTR Corp's involvement in the Beijing Metro Line 16 public-private partnership (PPP) project, coupled with the new PPP regulations indicate a brighter outlook for private sector investment in China's railway sector. This will be crucial in supporting Beijing's ambitious railway development plans, which have largely been driven by state-owned entities that are increasingly mired in debt.
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
|Construction industry value, CNYbn||4,241.69||4,571.52||4,901.38||5,240.00||5,601.67||5,987.96||6,400.55|
|Construction Industry Value, Real Growth, % y-o-y||6.78||6.28||4.52||4.21||4.20||4.20||4.19|
|Construction Industry Value, % of GDP||6.6||6.6||6.5||6.4||6.3||6.2||6.1|
China maintains its Risk/Reward Score of 63.9 in Q116, while a rise in position to 3 rd regionally out of 17 countries is due to the lower score registered by India and Hong Kong.
The country's large market means investment opportunities are still substantial, despite the ongoing economic slowdown, underpinning its strong rewards score.
A larger than expected slowdown in the country's real estate sector is a key risk.
|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.