Market Trends of China Construction Industry
Increase in Output value of China Construction Industry
- The output value of construction in China from 2011 to 2021 indicates progressive growth in the industry. In 2022, the construction industry in China generated an output of over 31 trillion yuan (4.37 trillion), representing an increase of almost 100 percent from a decade ago.
- Demographics are expected to continue spurring growth in residential construction in China. Rising household income rates, along with population migration from rural to urban areas, are expected to continue to drive demand for residential construction in the country. Increased emphasis on both public and private sector affordable housing would fuel development in the residential construction sector.
- Non-residential infrastructure is also projected to expand dramatically in the coming years. The aging population in China is increasing the demand for the construction of healthcare facilities and new hospitals. Rising wages are also expected to boost consumer spending in China. This will create demand for various services, including education and entertainment, and later for plant construction in the country.
- In contrast, infrastructure projects have maintained double-digit growth since June 2022, offsetting a decline in demand for construction work from developers. Investment in Power & Utilities and Hydraulics & Environment projects increased by 17.8% and 12.8% year-on-year in September 2022, respectively. As a result, overall construction activity expanded in 2022, reflected in the strength of the construction PMI.
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Increase in Value of Contracts
- From January to February 2023, the value of performed overseas contracts was RMB 126.69 billion, up 11% (USD18.23 billion, up 1.5%) year-on-year; the value of new contracts was RMB174.09 billion, down 9.9% (USD 250.5 billion, down 17.6%) year-on-year.
- In 2022, approximately 36.65 trillion yuan (USD 5.17 trillion) worth of new contracts were signed by the construction enterprises in China, accounting for more than half of the total value. Driven by rapid urbanization, the construction industry in China exceeded the output of 31 trillion yuan (USD 4.37 trillion) in that year. In 2022, the share of the urban population in China increased by 1.1 percentage points (+1.76 percent) since 2021. While the growth is slowing down, with 63.56 percent, the share is at its peak in the observed period. Notably, the share continuously increased over the last years.
- Furthermore, Infrastructure investment is likely to continue to grow in 2023 on robust local-government bond issuance, accelerated project launches, and supportive policy at both the central and local government levels. In 2022, the value added of the Chinese construction industry increased by about 5.5 percent compared to the previous year, 2021.
