Growth in Chinese construction spending to continue

21 May 2010

Construction spending in China is forecast to grow at +9.1% each year through to 2014 according to the latest study by The Freedonia Group. The growth means that in 2014 total construction spending is forecast to hit CNY 12 trillion (US$ 1,7 trillion), up from CNY 7.7 trillion (US$ 1.1 trillion) last year.

The study found that China still represents the fastest growing major national market in the world, despite the forecasted growth showing a more moderate pace than experienced over the past five years.

Growth will be boosted by a growing domestic economy, ongoing industrialisation, rebounding foreign investment funding, efforts to expand and upgrade infrastructure, rising income levels and further population and household growth.

Infrastructure and utilities spending are forecast to lead the way with growth of +10% per year through to 2014 as both sectors benefit from state-led efforts to expand and upgrade China's transportation infrastructure and electricity networks.

Residential building, which accounted for 37% of total construction spending in 2009, is expected to see further growth at an annual rate of +8.4% through to 2014, supported by rising levels of personal income. The sector is also expected to benefit from government efforts to improve living conditions for those on low-incomes through the construction of affordable and low-rent houses in urban areas, as well as subsidies for the modernisation of dilapidated rural properties.

Following a sharp decline in foreign investment through 2008 and 2009 as a result of the global financial crisis, the study expects a rebound in both foreign and local investment in the manufacturing sector. Also in the non-residential sector, government efforts to improve education and healthcare will help to spur growth.

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