Construction Expenditures in China to Grow Over 9% Annually Through 2014

Construction expenditures in China are expected to rise 9.1 percent per annum in real terms through 2014, moderating significantly from the pace of the 2004-2009 period.  Notwithstanding its deceleration in growth, China still represents the fastest growing major national market in the world.  Increases will be bolstered by a growing domestic economy, ongoing industrialization, rebounding foreign investment funding, continuing efforts to expand and upgrade physical infrastructure, rising income levels, and further population and household growth.  These and other trends, including market share and product segmentation, are presented in Construction Outlook in China, a new study from the Beijing office of The Freedonia Group, Inc., a Cleveland-based industry research firm.

Nonbuilding construction will be the fastest growing sector, advancing 10.0 percent annually in real terms through 2014.  Government spending initiatives are the predominant drivers of nonbuilding construction activity.  Growth will benefit from state-led efforts to expand and upgrade China’s transportation infrastructure.  Utilities construction will also contribute to nonbuilding construction spending gains, as the government continues to increase power generation capacity and improve electricity transmission networks.

Residential building is the largest market for construction services in China, accounting for 37 percent of total construction spending in 2009.  Residential building construction expenditures are expected to increase at an annual pace of 8.4 percent through 2014, primarily supported by rising personal income levels.  Government efforts to improve living conditions for low-income earners (including the 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.  However, deceleration in the overall economy and household formation will constrain residential building construction activity to some extent.

Nonresidential building construction expenditures are forecast to rise 9.0 percent per year through 2014.  Growth will be driven by rebounding local and foreign investment in the manufacturing sector, following the sharp moderations associated with the global economic downturn of 2008 and 2009.  Government efforts to improve public services such as health care and education will also spur gains.

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.