Market Trends of China Construction Industry
This section covers the major market trends shaping the China Construction Market according to our research experts:
Increase in Output value of China Construction Industry
- The output value of construction in China from 2011 to 2021, indicates progressive growth in the industry. In 2021, the construction output value in China achieved its peak at around CNY 29.31 trillion (USD 4.25 Trillion). Demographics are expected to continue spurring growth in residential construction in China. Rising household income rates, along with population migration from rural to urban areas, are expected to continue to drive demand for residential construction in the country. Increased emphasis on both public and private sector affordable housing would fuel development in the residential construction sector.
- Non-residential infrastructure is also projected to expand dramatically in the coming years. The ageing population in China is increasing the demand for the construction of healthcare facilities and new hospitals. Rising wages is also expected to boost consumer spending in China. This will create demand for various services including education and entertainment, and later for plant construction in the country.
- In contrast, infrastructure projects have maintained double-digit growth since June 2022, offsetting a decline in demand for construction work from developers. Investment in Power & Utilities and Hydraulics & Environment projects increased by 17.8% and 12.8% year-on-year in September 2022 respectively. As a result, overall construction activity expanded in 2022, reflected in the strength of the construction PMI.
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Increase in Value of Contracts
- In 2021, approximately CNY 34.5 trillion (USD 5.01 Trillion) worth of new contracts was signed by the construction enterprises in China, accounting for more than half of the total value. Driven by rapid urbanization, the construction market in China exceeded the output of CNY 29 trillion (USD 4.21 trillion) in 2021.
- In addition to several contracts awarded to China State Construction in the past by local casino operators and hotels – such as Wynn Resorts, MGM, Melco, and The 13 the group has also been awarded several contracts for public works and urban development projects in the city. New construction contracts increased by 12% in 2021 and by 15% in the fiscal year ending August 2022. This was underpinned by 24% and 30% growth in new infrastructure contracts, respectively, as the Chinese government helped the economy.
- Building new real estate is essential to the country in many ways. For example, when people migrate to urban areas to work, the demand for housing in big cities increases. Additionally, many with investment opportunities see real estate as an attractive option to drive demand. For local governments, the sale of land use rights is an important source of income. This means that municipalities often rely on continuous property development independent of demand. In such cases, the contracts automatically increase boosting the construction market simultaneously.
