Construction Expenditures to Increase in China

Construction expenditures in China are expected to rise 9.2 percent per year through 2012, according to a report by Cleveland-based market research firm the Freedonia Group.

A rapidly expanding domestic economy, continuing efforts to upgrade physical infrastructure, sustained strength in foreign investment funding and further population growth will all boost construction spending in China.

According to the Freedonia Group study, nonbuilding construction will be the fastest growing sector, advancing 10.2 percent per year through 2012. Growth will be fueled by government initiatives to expand and upgrade the country’s infrastructure, especially its highways, railways and subway systems. Utilities construction will also contribute to nonbuilding construction spending gains, as the government continues to increase the country’s power generation capacity and improve electricity transmission networks, as well as expand and improve water supply coverage and natural gas distribution.

Nonresidential building accounted for the largest share of construction spending in China in 2007, reflecting the nation’s emergence as an economic powerhouse over the last decade and its position as the largest producer of manufactured goods in the world. Nonresidential construction expenditures are projected to increase 8.9 percent per year through 2012. China’s ongoing industrialization and modernization will help boost investment in manufacturing, office and commercial facilities.

Residential building construction will grow at an 8.4 percent per year pace. Advances will be spurred by rising employment and personal income levels, further urbanization of the population and increasing average per capita living space in both urban and rural areas.

The full study, “Construction Outlook in China,” is available for purchase through the Freedonia Group at www.freedoniagroup.com.