{"id":13083,"date":"2023-10-02T12:30:27","date_gmt":"2023-10-02T12:30:27","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=13083"},"modified":"2025-04-23T09:05:13","modified_gmt":"2025-04-23T09:05:13","slug":"practical-guide-to-the-construction-industry-in-china","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/practical-guide-to-the-construction-industry-in-china\/","title":{"rendered":"A Practical Guide to the Construction Industry in China"},"content":{"rendered":"

Although the construction industry in China was deeply affected by the pandemic, government support as part of the 14th Five-Year Plan is expected to help the world\u2019s largest construction market to new heights, writes Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Global<\/h2>\n

China\u2019s construction industry was valued at USD 4.6 trillion in 2022. The industry is projected to achieve an average annual growth rate of more than 4% between 2024 and 2027, supported by investment in infrastructure projects in transportation, energy, water systems and new urbanisation as part of the 14th Five-Year Plan<\/a> (2021\u20132025).<\/p>\n

While construction is a cyclical market, and the construction sectors of all countries experience ups and downs, the Chinese market is in a league of its own. Considerable highs have often preceded deep lows.<\/p>\n

The Covid-19 pandemic deeply affected most world economies, including the construction sector. However, China experienced high sales in 2020 and 2021, thanks to government stimulus spending, followed by a drop in 2022 due to less financing and the Chinese authorities\u2019 zero-Covid<\/a> approach, which severely impacted businesses.<\/p>\n

In August 2022, the Chinese government announced approximately USD 1 trillion of investment in infrastructure megaprojects, providing a boost to construction and related activities.<\/p>\n

\"launchpad<\/a><\/p>\n

China\u2019s construction market by segment <\/strong><\/h4>\n

The key sectors in the construction market in China are commercial construction, industrial construction, infrastructure construction, energy and utilities construction, institutional construction and residential construction.<\/p>\n

Commercial construction
\n<\/strong>The project types in this sector include leisure and hospitality buildings, office buildings, outdoor leisure facilities and retail buildings. The commercial construction sector is expected to record marginal growth of less than 1% this year, owing to a sharp decline in office construction.<\/p>\n

Over the forecast period, commercial sector output will be supported by an increase in domestic tourism and robust retail activity, coupled with investment as part of the 14th Five-Year Plan.<\/p>\n

Industrial construction
\n<\/strong>This sector includes chemical and pharmaceutical plants, manufacturing plants, metal and material production and processing plants and waste processing plants.<\/p>\n

The industrial construction sector is expected to grow by more than 7% in 2023, aided by robust industrial and manufacturing production. The sector\u2019s output in the forecast period will be aided by the development of high-tech and lithium battery manufacturing projects.<\/p>\n

Infrastructure and transport construction
\n<\/strong>This sector includes rail and road infrastructure. Increased transport investment, combined with an acceleration of project development by regional and national governments, is expected to see infrastructure construction output rise by more than 17% this year.<\/p>\n

When it comes to infrastructure projects, transport has received a large part of government funding. China has, by some distance, the longest high-speed railway network in the world at approximately 40,000km with reports suggesting that the country plans to build another 2,500km in 2023.<\/p>\n

Energy and utilities construction
\n<\/strong>The project types in this sector include electricity and power, oil and gas, telecommunications, sewage infrastructure and water infrastructure. The energy and utilities sectors are expected to grow in 2023 and record an AAGR of more than 5% between 2024 and 2027, supported by the government\u2019s target to increase energy generation and energy storage capacity.<\/p>\n

Institutional construction
\n<\/strong>This sector includes educational buildings, healthcare buildings, institutional buildings, research facilities and religious buildings. Forecast-period growth in the institutional construction sector will be driven by investment in healthcare, scientific research, and educational buildings as part of the 14th Five-Year Plan.<\/p>\n

Residential construction
\n<\/strong>The project types include single-family housing and multi-family housing. The residential construction sector is expected to remain weak this year, owing to tighter government controls aimed at reducing debt levels among real estate developers and a sharp drop in new residential investment. Rising household incomes, combined with the government\u2019s efforts to renovate ageing urban residential areas across the country, will support the sector in the latter part of the forecast period.<\/p>\n