BMI View : A structural slowdown in China's construction sector will not cause a sharp collapse in large-scale spending on projects, with the government relying on investment in infrastructure to prop up growth rates. We believe the 13 th Five Year Plan is likely to boost investment in the railways, airports and water infrastructure sectors and China's One Belt One Road initiative will also provide impetus for the country to accelerate transport infrastructure projects.
Latest Updates And Structural Trends
We forecast China's construction sector to grow by an annual average of 4.8% between 2016 and 2025 in real terms, a significant slowdown from the 11.5% registered between 2006 and 2015. Our weaker outlook for China's construction sector is in line with our Country Risk's team who forecast real GDP growth to slow to 5.6% on average over the period 2016-2025 (against 9.6% real GDP growth between 2006 and 2015), as Beijing steers the Chinese economy towards more consumption-led growth.
Under the 13 th Five Year Plan, airports, railways and water infrastructure are set to outperform and opportunities in the renewables sector will depend on China's ability to upgrade its transmission grid.
We believe favourable government policies , that will lend some support to the property market , and plans by the government to attract more private investment into the infrastructure industry provide upside risks to our outlook.
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
|Construction industry value, CNYbn||4,573.33||4,883.07||5,222.58||5,599.19||6,002.58||6,434.67||6,897.49|
|Construction Industry Value, Real Growth, % y-o-y||6.57||5.27||4.70||4.71||4.70||4.70||4.69|
|Construction Industry Value, % of GDP||6.6||6.6||6.5||6.4||6.3||6.2||6.2|
China's RRI score rose to 65.1 out of 100 from 63.9 in the previous quarter. China achieves a high score for capital investment and external risk and ranks in 2 nd position regionally out of 21 countries.
The country receives below-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).
Weak growth in the residential and non-residential building segment 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.