Construction Spending to Increase in China

Construction expenditures in China will increase 11.6 percent per year through 2010, according to a study by Cleveland-based market research firm the Freedonia Group.

Non-building construction will be the fastest growing sector, the Freedonia Group study predicts, with expenditures climbing 10.5 percent annually in real terms through 2010. Growth will be driven by government funding for large-scale infrastructure construction like the Beijing-Shanghai High Speed Railway, the West-East Oil Pipeline, the South-North Water Diversion and the 7918 Network national highway system currently underway.

In addition, residential building construction activity is expected to advance at a 9.1 annual pace through 2010, encouraged by government efforts to boost average per capita living space and private home ownership, according to the study’s findings.

In 2005, the nonresidential building market accounted for more than two-fifths of all construction spending in China, reflecting the nation’s emergence as an economic powerhouse. Nonresidential construction expenditures are forecast to rise 9.4 percent annually through 2010, stimulated by increases in consumer spending, accommodative government policies and foreign direct investment.