As Quoted In Investorideas.com

Construction expenditures in China will continue to grow through 2019, fueled by an increasing urban population, continued industrialization, expanding foreign investment and rising personal income levels.

Expenditures to rise nearly 8% annually through 2019

Construction expenditures in China are expected to grow 7.8 percent per annum in real terms through 2019. Gains will be driven by ongoing industrialization, an increasing urban population, expanding foreign investment funding, rising per-sonal income levels, and further population and household growth in China. In addition, the government’s effort to sustain growth in the manufacturing sector, improve the country’s infrastructure, expand municipal utilities, and balance regional economic disparity will help growth in construction spending. However, further growth will be restricted by a slowdown in the Chinese economy, especially in fixed asset investment.

Northwest to grow fastest

China consists of several regional mar-kets characterized by different climates, populations, and levels of economic de-velopment. The Central-East accounted for 43 percent of construction spending in China in 2014, higher than its share of population or economic output. However, the region will see slower growth through 2019 than the other five regions of China -- 7.2 percent yearly -- mainly due to the large size of its existing stock. Construction expenditures in the Northwest are forecast to rise 9.0 percent yearly in real terms through 2019, outpacing all other regions. China’s “Great Western Development” strategy will result in sizable gains in spending on infrastructure and manufacturing applications in this region.

Demographics to bolster residential construction

Residential building construction, which accounted for 31 percent of construction spending in China in 2014, will advance at a 7.5 percent annual pace in real terms through 2019. Rising personal income levels, population and household growth, and population migration from rural to urban areas will drive advances. Government efforts to improve living conditions for low income earners (such as construction of affordable and low rent houses in urban areas and subsidies for alterations of dilapidated farmhouses in rural areas) will also further gains in this segment.

Domestic spending to fuel nonresidential building

Nonresidential buildings represented the largest segment of the construction mar-ket in China in 2014, accounting for 40 percent of construction spending. Non-residential construction spending is fore-cast to grow 8.1 percent annually in real terms through 2019. Robust growth in consumer spending for manufactured goods and services, accommodative government policies, and foreign direct investment, as well as government efforts to improve standards of living in China, will all help to spur gains in non-residential infrastructure.

Study coverage

This Freedonia industry study analyzes the 17.6 trillion yuan construction industry in China. It presents historical demand data (2004, 2009 and 2014) and forecasts (2019 and 2024) by market (residential building, nonresidential building, nonbuilding), type (e.g., single family housing, multifamily housing, industrial, office and commercial, institutional, roads and infrastructure, utilities) and geographic region. The study also considers market environment factors, details industry structure, evaluates company market share, and profiles 38 industry participants, including China State Construction Engineering, China Railway Group, and China Railway Construction.