View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Comment
February 27, 2019updated 12 Mar 2019 9:08am

Stimulating China’s construction sector comes with risks and rewards

The new hotel marks the debut of Marriott’s luxury brand Ritz-Carlton in Turks and Caicos Islands.

By Staff Writer

China’s construction industry strengthened in the latter stages of 2018 and more public infrastructure spending is expected in 2019.

Free Report
img

Internet of Things set to transform the construction industry

The Internet of Things (IoT) is proving hugely beneficial to the construction industry, allowing different assets and people to be monitored and accounted for across a traditionally fragmented industry. As a result, companies that invest in IoT now promise to make long-term gains in the industry. According to GlobalData forecasts, spending on IoT in construction will reach $9.6bn by 2025. For an industry that has large sites to manage, strict project timelines, hazardous working conditions, and tight profit margins, IoT can create a manageable view of construction sites for project managers, streamline operations, and protect workers. In addition, it allows real-time data streams of assets, automates time-consuming tasks, and ensures employee safety and productivity. IoT integration with equipment manufacturing also has rich advantages for asset monitoring sensors. This, combined with artificial intelligence (AI) can help forecast materials and workers needed during the procurement stage and assist in forecast financing. Read GlobalData’s whitepaper to find out more, including information on:
  • IoT value chain
  • Market size and growth forecasts
  • Mergers and acquisitions
  • Leading IoT adopters in construction
  • Specialist IoT vendors in construction
Don’t get left behind – find out how IoT can fortify your operations and make investments now.
by GlobalData
Enter your details here to receive your free Report.

However, a return to the boom years of double-digit growth in construction is not anticipated anytime soon, with GlobalData expecting the industry’s expansion to remain on a general slowing trend.

China construction sector 2019

Construction activity in China expanded by 6.1% year-on-year in the fourth quarter of 2018, pulling up growth for the year as a whole to 4.5%.

Although this was a marginal improvement on the 2017 figure, the pace of expansion in 2018 was still relatively sluggish for the industry as a whole, bearing in mind that over the preceding 10 years China’s construction industry expanded at an annual rate of 11%.

Reflecting the weak performance in the buildings sector, total floor space of buildings completed dropped by 1.3% in 2018 compared to the previous year’s total.

China’s double-digit growth years

The heady days of double-digit growth in China’s construction industry have long gone, with the authorities taking steps in recent years to rein in excessive debt-driven investment in infrastructure and urban development that had resulted in excess capacity in infrastructure and industry, and oversupply in real estate.

But in a heavily managed economy, such as China’s, the government can reverse policy direction relatively quickly. In response to the property market slowdown, local authorities are now likely to reinvigorate demand by relaxing measures that had been imposed to avoid overheating in the market. The authorities are also likely to invest in infrastructure to support the economy as it sees fit.

For example, in October 2018 the State Council (China’s chief administrative authority) issued guidelines on increasing investment in various types of infrastructure, notably railways, roads, waterways and airports.

These policy changes are expected to ensure that annual construction output growth remains around the 4% mark over the next five years, with the potential for slightly higher growth in 2019–2020 if new infrastructure projects move to the construction phase without delay.

The construction industry’s performance will continue to reflect the ongoing struggles of China’s policymakers to deal with the challenge of supporting the expansion of the economy while limiting the financial risks associated with the excessive fiscal and monetary stimulus.

China: construction output growth (real, % change)

Source: GlobalData

Related Companies

Free Report
img

Internet of Things set to transform the construction industry

The Internet of Things (IoT) is proving hugely beneficial to the construction industry, allowing different assets and people to be monitored and accounted for across a traditionally fragmented industry. As a result, companies that invest in IoT now promise to make long-term gains in the industry. According to GlobalData forecasts, spending on IoT in construction will reach $9.6bn by 2025. For an industry that has large sites to manage, strict project timelines, hazardous working conditions, and tight profit margins, IoT can create a manageable view of construction sites for project managers, streamline operations, and protect workers. In addition, it allows real-time data streams of assets, automates time-consuming tasks, and ensures employee safety and productivity. IoT integration with equipment manufacturing also has rich advantages for asset monitoring sensors. This, combined with artificial intelligence (AI) can help forecast materials and workers needed during the procurement stage and assist in forecast financing. Read GlobalData’s whitepaper to find out more, including information on:
  • IoT value chain
  • Market size and growth forecasts
  • Mergers and acquisitions
  • Leading IoT adopters in construction
  • Specialist IoT vendors in construction
Don’t get left behind – find out how IoT can fortify your operations and make investments now.
by GlobalData
Enter your details here to receive your free Report.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Monday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Design Build Network