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The Chinese economy is facing turbulent times, and as a result, the government has ramped up its infrastructure investment to offset the damage caused by the ongoing pandemic-related restrictions and faltering property sector. Over the last few quarters, the government has increased its investment in areas such as water, roads, and healthcare facilities, among others. Billions of dollars are being spent on different infrastructure construction projects across the country. For instance,
According to the Ministry, construction activities have begun on over 19,000 water conservancy projects, of which 31 are major infrastructure projects. This also includes the South-North Water Transfer Project, which relocates water from the Yangtze River to Northern China, through an underground network of water tunnels. Notably, the construction activities on the South-North Water Transfer Project began in July 2022.
Earlier in 2022, construction activities were also initiated on a major floodgate-reconstruction project along the Yellow River. Under the project, a total of 37 floodgates are to be constructed between Shandong Province and Central Henan Province. The infrastructure project, which is estimated to be worth 2.07 billion yuan, will improve irrigation in one of the most critically important grain-producing regions.
The Guangdong-Beibu Gulf Water Resources Allocation Project and the Yinjiangbuhan Tunnel are among the other major infrastructure projects, which are currently undertaken by the government. Notably, the Chinese government has also made green and renewable energy a central focus, as part of its goal to achieve carbon neutrality by 2060. In its bid to achieve carbon neutrality, the government has announced various new solar and wind projects in the northern part of the country. For instance,
Alongside the renewable energy sector, the Chinese government has also increased its investment in the transportation segment in 2022. For instance,
Furthermore, the construction of underground pipeline networks for water, electricity, gas, and telecommunications has also seen accelerated momentum in China in 2022. According to the Ministry of Housing and Urban-Rural Development, 68 underground pipeline projects were under development in H1 2022. With urbanization levels rising in the country, the construction of underground corridors will further drive investment in the Chinese construction market over the next three to four years.
In February 2022, Chongqing, a city in South-Western China, announced the completion of 164.9-kilometer of underground pipelines, involving a total investment of 7.08 billion yuan. Notably, by 2025, the city plans to have 815 kilometer of underground pipelines for nearly 17 million people. This will further drive investment in the infrastructure sector in China.
While the government investment in the infrastructure sector has increased significantly, the stimulus might not be enough to offset the hit to the construction industry caused by the ongoing property slump. Notably, the liquidity crisis in China has resulted in plunging property investment. Several property developers in the country have put apartment construction activities on hold amid the ongoing liquidity crisis faced by them.
Consequently, ConsTrack360 expects the Chinese construction market to remain under pressure from the short-term perspective. However, with the Chinese government expected to keep investing billions of dollars in the construction of infrastructure, across power, water, transport, and healthcare sectors, ConsTrack360 maintains a steady growth outlook for the industry from the medium to long-term perspective.
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