Potential for the construction industry as China invests in transport infrastructure

Despite a currently challenging environment, the construction market in China still offers significant potential. Growth in the country’s construction sector is being driven, in part, by state investment in infrastructure. Bauma China 2014 reports on the current state of the industry.

Transport infrastructure

A total amount of RMB1.346 billion (€160 billion) was invested in China in civil engineering and infrastructure projects in the first six months of 2013, a 21% increase y/y according to the National Bureau of Statistics of China. A large section of the investment went towards building new roads.

"The activities here are increasingly concentrated in the west of the country," said Bernd Schaaf, Germany Trade & Invest (GTAI). The Chinese government also plans to promote economic growth inland, away from the booming coastal areas in the east of the country, in order to reduce the gap between the urban and rural communities. "Huge investment in transport and infrastructure is needed if this is to be achieved," commented Schaaf.

Building projects under the Five Year Plan

During the current Five Year Plan (2011 – 2015), up to 65 000 km of new roads are to be built by 2015. In the same period 30 000 km of new railway tracks will be built around the country, with a total investment volume of RMB2.8 trillion. The government also has plans to build new airports in China. GTAI’s current economic report (October 2013) shows that investment in the country in the first six months of 2013 has risen by 27% y/y to RMB53 billion.

Construction machinery

The Chinese construction machinery market is not performing particularly well, despite all the major construction works in the country. Sebastian Popp, in charge of the construction equipment and building material machinery at the German Engineering Federation (VDMA) comments on the industry: "Up until 2011 the country was experiencing a building boom, as the construction sector of the economy was overheating." Due to this, almost all Chinese construction machinery manufacturers reacted by expanding their capacities. "As a result of central government’s measures to cool down the building sector, demand for construction machinery fell sharply in 2012. Now the situation is one of significant overcapacities and enormous fleets of recently produced machinery in the market," Popp said.

However, overcapacity, according to Popp, is generally not a huge problem for the international manufacturers who are producing in China. The larger problem is that of resisting over-engineering. Popp commented: "In an ever more competitive market, it’s all the more important to deliver machinery and plant that is attuned to Chinese demand."

According to Schaaf, GTAI, opportunities in the construction machinery market can be found in particular in high-spec infrastructure projects, "For example, in the shape of tunnel-driving machines for above-ground and underground railway construction and special machinery for mining, building construction and civil engineering."

Bauma China 2014

Bauma China 2014 is the International Trade Fair for Construction Machinery, Building Material Machines, Construction Vehicles and Equipment. The fair runs from 25 – 28 November 2014 at the Shanghai New International Expo Centre. Find out more information about Bauma China 2014 here.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldcement.com/asia-pacific-rim/23122013/potential_for_the_construction_industry_as_china_invests_in_transport_infrastructure_484/