China Infrastructure Report Q1 2013
Business Monitor International, November 2012, Pages: 123
BMI View:
We have revised up slightly our 2013 infrastructure real growth figure for China, which in turn has prompted an upwards revision in our entire construction industry value for 2013. Our revision comes on the back of the project details announced for the rail-heavy stimulus plan (as announced in September 2012). We were already pricing-in a small rise for 2012 railways infrastructure industry value real growth, and now we believe this will be followed by another rise in 2013, when the bulk of new projects are due to go into construction, according to our interpretation of government announcements and our Infrastructure Key Projects Database.
Key developments in China’s infrastructure sector:
- Leading indicators, such as steel production and total fixed assets investments growth, clearly show that demand has cooled, corroborating and reinforcing our view of a slowdown in the entire construction sector over 2012 and 2013.
- Gas-related infrastructure will see a massive boost as the government focuses on re-aligning the energy mix away from coal and towards gas. This includes investment in gas distribution infrastructure, liquefied natural gas (LNG) terminals and gas-fired power plants.
- Airports remain high on the government's agenda, which is reflected in our bullish airports infrastructure value forecast. The Chinese government announced that it will build 82 airports and refurbish a further 101 by 2015. This will take the number of airports in the country to around 230.
- We remain bearish on China's residential and non-residential construction sector, as demand within the country's stalling economy continues to weaken significantly. Our 2012 estimate of 4.1% year-on-year (y-o-y) real growth also reflects the cooling of an investor boom that had inflated China's real estate sector and also represents the lowest level of sector growth since 1999.
- Whilst social housing builds have the potential to significantly drive construction, our concerns over the ability of indebted local governments to meet their share of funding requirements mean we see risks to the timely implementation of the ambitious scheme. A tightening in project funding is highlighted by the central government's announcement that social housing unit starts for 2012 were due to be 7mn - down from 10mn units in 2011.
Our bearish outlook for China's construction industry is supported by a slump in the performance of domestic machinery producers. With a huge fall in fixed-asset investment in the Chinese economy,
producers of heavy equipment are showing signs of weakness across the board.
China offers scale – measured in terms of total construction industry value – and high levels of growth, combined with a high level of capital investment as a percentage of GDP. The combination of these three factors plays strongly in China’s favour in our infrastructure risk/reward ratings
(RRRs). However, the strength of its infrastructure market often masks the high barriers to entry, the opaque regulatory and legal framework and the uncompetitive environment, which have shaved points from the country’s overall ratings. Consequently, we have revised down the component scores in these categories. In BMI’s infrastructure RRRs, China scores 64.9 out of 100, with its strong infrastructure market propelling it near the top of the regional table.
BMI Industry View 5
SWOT Analysis 7
China Infrastructure SWOT 7
Market Overview 8
Competitive Landscape 8
Table: EQS 8
Building Materials 10
Asia 10
Cement Forecasts 17
Table: China Cement Production and Consumption Data, 2010 - 2016 17
Table: China Cement Production and Consumption Long-Term Forecast, 2015-2021 17
Industry Forecast Scenario 19
Table: China Construction And Infrastructure Industry Data, 2010-2016 19
Table: China Construction And Infrastructure Long-Term Forecast, 2015 -2021 20
Construction and Infrastructure Forecast Scenario 22
Transport Infrastructure 28
Table: China Transport Infrastructure Industry Data, 2010-2016 28
Table: China Transport Infrastructure Long Term Forecast, 2015-2021 30
Transport Infrastructure Outlook and Overview 33
Major Projects Table – Transport 36
Table: Major Projects – Transport 36
Energy and Utilities Infrastructure 55
Table: China Energy and Utilities Infrastructure Industry Data, 2010 - 2016 55
Table: China Energy and Utilities Infrastructure Long-Term Forecast, 2015 - 2021 57
Energy and Utilities Infrastructure Outlook and Overview 59
Major Projects Table – Energy And Utilities 66
Table: Major Projects – Energy and Utilities 66
Residential/Non-Residential Construction and Social Infrastructure 81
Table: China Residential and Non-residential Building Industry Data, 2010-2016 81
Table: China Residential and Non-residential Building Long-Term Forecast, 2015-2021 81
Residential/Non-Residential Building Outlook and Overview 82
Major Projects Table – Residential/Non-Residential Construction and Social Infrastructure 88
Table; Major Projects – Residential/Non- Residential Construction and Social Infrastructure 88
Risk/Reward Ratings 92
China’s Risk/Reward Ratings 92
Rewards 92
Risks 92
Regional Overview 93
Asia Pacific Infrastructure Risk/Reward Ratings 93
Asia Infrastructure Risk/Reward Ratings 99
Sinohydro 00
China Communications Construction 02
Shanghai Construction Group (SCG) 04
China Railway Group 05
China Railway Construction Corporation (CRCC) 07
Global Overview 109
Methodology 116
Industry Forecasts 16
Construction Industry 17
Data Methodology 17
New Infrastructure Data Sub-sectors 17
Construction 19
Capital Investment 19
Construction Sector Employment 20
Infrastructure Business Environment Rating 21
Table: Infrastructure Business Environment Indicators 22
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