By Nick Gilbert
As per China’s National Bureau of Statistics during 2011, the construction industry was responsible for about one-fourth of China’s GDP, with building constructions contributing to a major share of it. During the past 5 years up to 2012, the earnings of the sector have increased at an average yearly rate of 22.1% to $1.24 trillion.
China’s economy’s opening in the early 2000s, which offered improved availability of funds for buying residences, increased the demand for residential constructions to a great extent. According to IBISWorld, this and also the quick growth of government activities and downstream commercial industries inclusive of manufacturing, wholesaling and retailing have been strong contributing factors in the sector’s robust performance.
China’s building construction sector generates about a quarter of the total international construction sector trade value. Many of the Chinese builders are prominent international contractors. Important participants such as the Shanghai Urban Construction Group, Zhejiang Construction Investment Group and CSCEC also have operations in affiliated sectors such as real estate promotion, civil engineering, and manufacture of construction machinery. By functioning in various sectors, they reduce their expenses and maintain enduring supply sources. But, many of the construction organizations are small and do not have much business scope. Market share concentration is low and the industry is scattered in different regional markets.
Due to a very quick increase in residential prices, the State Council and local governments came up with a range of measures to control speculative residential demand and stop the enormous price rise. It is anticipated that these measures will check sales volume and average prices of commercial structures and will temper real estate investment and start of new residential ventures. But increased government-compelled, indemnified, low-income residential constructions are increasing the demand for building constructions and counteract the slow development of commercial and residential real estate markets.