2013-12-11 14:02:06 - New Construction market report from Business Monitor International: "China Infrastructure Report Q1 2014"
The launch of another stimulus plan in July 2013 has boosted fixed-asset investment in the construction sector (particularly infrastructure), supporting our view of faster construction growth in 2013compared to 2012 levels. However, we do not believe that the recovery in infrastructure and construction activity will sustain into 2014. The key reason for this outlook is that current fixed asset investment growth depends on the increase in liquidity in China's financial system, and is unsustainable due to diminishing marginal returns on expenditure.
Key developments in China's infrastructure sector:
Full Report Details at
- www.fastmr.com/prod/723551_china_infrastructure_report_q1_2014.a ..
* In September 2013, an unnamed official from China Railway Corporation stated that the Chinese government will likely formulate a detailed plan for the creation of a railroad
development fund by end-2013. The fund is expected to be established in 2014. The country's central government is reportedly planning to allocate CNY60bn (US$9.76bn) for railroad development, while also planning to secure CNY20bn (US$3.25bn) from other investors. Additionally, the government is expecting to raise between CNY200bn (US$32.52bn) and CNY300bn (US$48.78bn) for the development fund during 2014-2015. Of this total CNY100bn (US$16.26bn) would be contributed from the central government's budget.
* In September 2013, Zhang Zhengling, the deputy director of planning and development at State Grid Corporation of China, told Reuters that 4,633km of power lines, which are designed to cut transmission and distribution losses over large distances, have been completed - while 6,400km are under construction. In addition, a top official at the firm claimed that China's National Development and Reform Commission (NDRC) has approved half of all planned ultra-high voltage (UHV) power lines. 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. The flagship project will be Beijing's second airport with capacity of up to 70mn passengers by 2025. Another key project is the construction of a new airport close to Tibet, the Daochen Yading Airport, the world's highest altitude civilian facility.
* 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.
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. In BMI's Infrastructure RRRs, China scores 63.8 out of 100, with its strong infrastructure market propelling it near the top of the regional table.
Report Table of Contents:
BMI Industry View
- Infrastructure SWOT
- Construction And Infrastructure Forecast Scenario
- Table: China Construction And Infrastructure Industry Data, 2011-2016
- Table: China Construction And Infrastructure Long-Term Forecasts, 2017-2022
- Transport Infrastructure - Outlook And Overview
- Table: China Transport Infrastructure Industry Data, 2011-2016
- Table: China Transport Infrastructure Long-Term Forecast, 2017-2022
- Table: Major Projects Table - Transport
- Energy And Utilities Infrastructure - Outlook and Overview
- Table: China Energy and Utilities Infrastructure Industry Data, 2011-2016
- Table: China Energy And Utilities Infrastructure Long-Term Forecasts, 2017-2022
- Table: Major Projects Table - Energy And Utilities
- Residential/Non Residential Building - Outlook And Overview
- Table: Residential and Non-residential Building Industry Data, 2011-2016
- Table: China Residential and Non-residential Building Industry Data, 2017-2022
- Table: Major Projects Table - Residential/Non-Residential Construction and Social Infrastructure
Industry Risk Reward Ratings
- China - Infrastructure Risk/Reward Ratings
- China's Risk/Reward Ratings
- Asia - Infrastructure Industry Risk/Reward Ratings
- Table: Asia Pacific Infrastructure Risk Reward Ratings
- Competitive Landscape
- Table: EQS Data
- China Communications Construction
- Shanghai Construction Group
- China Railway Group
- China Railway Construction Corporation
Global Industry Overview
- Table: Latin America PPP Round-Up
- Industry Forecast Methodology
- Sector Specific Methodology
- Risk Reward Rating Methodology
- Sector Specific Methodology
- Table: Infrastructure Risk Reward Rating Indicators
- Table: Weighting Of Indicators
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