Chinese construction spending expected to rise through 2019

Construction Outlook in China, a new study from The Freedonia Group, Inc., has indicated expenditures on construction in China are anticipated to increase 7.8% annually in real terms through 2019.

Continued industrialisation, an expanding urban population, expanding foreign investment funding, rising personal income levels and further population and household growth in China are all reported to be factors that will increase the construction spending. In order to help the expansion in construction spending, the government will focus on maintaining growth in the manufacturing sector, improving China’s infrastructure, develop municipal utilities and balance regional economic disparity.

However, it is reported the growth will be limited due to a slowdown in the Chinese economy.

Non-building construction

28% of construction spending in 2014 went towards nonbuilding construction. It is anticipated that this will grow at an annual rate of 7.9% in real terms through 2019.

A focus on advancing China’s transportation infrastructure will contribute to this growth as well as expanding municipal facilities, such as water, power and heat supply systems.

Residential building

In 2014, 31% of construction spending in China went towards residential building construction. This is reported to increase at a 7.5% annual rate in real terms through 2019.

Analyst, Toni Niu, commented: “Rising personal income levels, population and household growth, and population migration from rural to urban areas will drive advances.” As well as, the government’s focus on improving living conditions for low-income earners will contribute to expanding this section of the industry, such as developing construction of affordable and low-rent houses in urban areas and subsidies for alterations of dilapidated farmhouses in rural areas.

Nonresidential building

The largest section of the Chinese construction market in 2014 was nonresidential buildings. It accounted for 40% of construction spending and it is predicted to see a rise of 8.1% annually in real terms through 2019. Key factors that are set to help this increase are rises in consumer spending for manufactured goods and services, accommodative government policies and foreign direct investment. The government is set on improving living standards in China and so construction of schools, hospitals and institutional structures will contribute to increasing nonresidential building.