Construction Expenditures in China Expected to Grow

According to a study from The Freedonia Group Inc., a Cleveland-based industrial market research firm, construction expenditures in China will increase 11.2 percent annually though 2008, reaching approximately $454 billion at current official exchange rates. In real (inflation adjusted) terms, spending will grow at a 7.8-percent annual rate.

Although The Freedonia Group says growth in Chinese construction demand will slow somewhat from the 1998-2003 pace, it adds that the country will continue to outperform other major national construction markets through 2008. Sustained strength in foreign investment funding, additional economic reforms, healthy demand for Chinese manufactured goods and further population and household growth will all work to drive demand for construction in China.

In particular, non-building construction is predicted to be the fastest growing sector, with expenditures climbing 8.9 percent annually in real terms through 2008. Residential building construction will advance at a 7 percent annual pace, spurred by government efforts to further boost average per-capita living space and private homeownership. In 2003, the nonresidential market accounted for two-fifths of all construction spending in China.

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