China Infrastructure Report Q1 2008

As one of the fastest-developing economies in the world, China has an insatiable appetite for infrastructural development. This report valued the country's construction industry at US$146.40bn in 2006 and forecasts it to grow at an average rate of 11.3% during 2008-2012.

The recent growth witnessed on the infrastructure front has given a tremendous boost to industrial and tourism development in China. The government has re-affirmed its commitment to infrastructure building by chalking out some major development plans for the 11th five-year plan period (2006-2012). These include construction and upgradation of roads, railways, oil utilities, water infrastructure and ports. Major ongoing projects in the country include the US$36bn road and seaport development programme in Guangdong; the US$29.5bn high-speed rail-link between Guangzhou and Nanning; the US$8.2bn Sichuan-Shanghai pipeline project, and the US$6.58bn nuclear power project in Dalian.

A large number of companies are setting up manufacturing units in China. Furthermore, the Beijing Olympics in 2008 have encouraged a large number of international enterprises to set up hotels and resorts in the country. At present, nearly 496 hotel projects are underway in China. A state-of -the-art bird'snest- shaped Olympic stadium is also being constructed for the forthcoming games. Major companies operating in the country's infrastructure sector include China State Construction Engineering Corporation (CSCEC), China Railway Engineering Corporation (CREC) and China Railway Construction Corporation (CRCC). A rapid pace of development is, however, marred by poor labour conditions, high levels of corruption and a decrepit legal system. Although the construction industry has been dominated by a few large public-sector enterprises, China is now trying to make the industry more competitive.

According to BMI's forecast, the construction industry in China is expected to be worth about US$315.32bn by 2012, contributing about 7.17% to the nation's gross domestic product (GDP).