INDUSTRY MARKET RESEARCH FOR BUSINESS LEADERS, STRATEGISTS, DECISION MAKERS CLICK TO VIEW

Table of Contents 2

List of Tables & Charts 3

Study Overview 4

Sample Text, Table & Chart 5

Sample Profile, Table & Forecast 6

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About Freedonia, Custom Research, Related Studies, 8

Construction Outlook in China

Industry Study with Forecasts for 2011 & 2016

Study #2898 | June 2012 | $5500 | 239 pages

The Freedonia Group 767 Beta Drive www.freedoniagroup.com Cleveland, OH • 44143-2326 • USA Toll Free US Tel: 800.927.5900 or +1 440.684.9600 Fax: +1 440.646.0484 E-mail: [email protected] Study #2898 June 2012 Construction Outlook in China $5500 239 Pages Industry Study with Forecasts for 2011 & 2016

Table of Contents NONRESIDENTIAL BUILDING Industry Composition...... 151 Market Share...... 155 General...... 88 Executive Summary Marketing...... 158 New Construction...... 92 Financial Issues & Requirements...... 160 Additions & Alterations...... 93 Market EnvironmenT Capital Expenditures...... 161 Maintenance & Repairs...... 93 Project Funding...... 163 General...... 4 Structure Types...... 94 State...... 163 Economic Overview...... 5 Industrial...... 96 Private Domestic...... 164 Recent Economic Performance...... 5 Office & Commercial...... 98 Foreign Investment...... 164 Economic Outlook...... 7 Institutional...... 99 Other...... 100 Demographic Overview...... 11 Company Profiles Population...... 12 Nonresidential Building Stock...... 101 Urbanization...... 14 Anhui Construction Engineering Group...... 166 Households...... 15 NONBUILDING CONSTRUCTION Balfour Beatty...... 168 Industrialization & Manufacturing Trends...... 17 Bechtel Group...... 170 General...... 103 Gross Fixed Capital Formation Trends...... 20 Beijing Construction Engineering Group...... 172 New Construction...... 106 Labor Force & Employment Patterns...... 21 Beijing Urban Construction Group...... 174 Maintenance & Repairs...... 108 Personal Income Trends...... 25 Black & Veatch...... 176 Structure Types...... 108 Banking System & Regulations...... 28 Bouygues SA...... 177 Roads & Other Transportation Currency Exchange Rates...... 32 China Communications Construction...... 179 Infrastructure...... 110 Inflation & Pricing Patterns...... 35 China ...... 182 Utilities...... 113 Legal & Regulatory Environment...... 38 China National Chemical Engineering...... 184 Other...... 114 Construction Technology & Quality...... 42 China National Machinery...... 186 The Twelfth Five-Year Plan...... 44 China Railway Construction...... 187 REGIONAL TRENDS China Railway Group Limited...... 189 China State Construction Engineering...... 192 OVERVIEW General...... 116 Chiyoda Corporation...... 195 Regional Demographic & Economic Trends...... 118 General...... 47 CTCI Corporation...... 197 Population Patterns...... 119 Construction Expenditures by Type...... 47 ...... 199 Economic Outlook...... 121 Construction Expenditures by Market...... 50 Fluor Corporation...... 201 Regional Construction Expenditures...... 123 International Environment...... 53 Foster Wheeler AG...... 203 Central-North...... 125 Construction Expenditures Fujian Construction Engineering...... 205 Overview...... 125 for Selected Countries...... 54 Guangdong Construction Engineering Group... 207 Construction Expenditures...... 127 Foreign Participation in China’s Guangsha Construction Group...... 208 Northeast...... 129 Construction Industry...... 55 Hebei Construction Group...... 209 Overview...... 129 HOCHTIEF AG...... 211 Construction Expenditures...... 132 Hunan Construction Engineering Group...... 213 RESIDENTIAL BUILDING Central-East...... 133 Jacobs Engineering Group...... 214 Overview...... 133 General...... 58 Jiangsu Suzhong Construction Group...... 215 Construction Expenditures...... 135 New Housing Construction Expenditures...... 62 Lend Lease Corporation...... 217 Central-South...... 137 New Housing Completions...... 65 Metallurgical Corporation of China...... 219 Overview...... 137 Single Family...... 68 NWS Holdings Limited...... 222 Construction Expenditures...... 139 Multiple Family...... 70 Qingjian Group Company Limited...... 224 Southwest...... 141 Additions & Alterations...... 71 Shaanxi Construction Engineering Group...... 225 Overview...... 141 Maintenance & Repairs...... 73 Shanghai Construction Group...... 227 Construction Expenditures...... 143 Housing Stock...... 75 Shanghai Urban Construction Group...... 229 Northwest...... 145 Single Family...... 78 Sichuan Huashi Group...... 230 Overview...... 145 Multiple Family...... 80 Group...... 232 Construction Expenditures...... 147 Ownership...... 82 URS Corporation...... 234 Living Space...... 83 Zhejiang Construction Investment Group...... 236 Urban...... 86 INDUSTRY STRUCTURE Other Companies Mentioned in Study...... 238 Rural...... 87 General...... 150

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List of Tables 2 Nonresidential Building Construction 5 Chinese Currency Exchange Expenditures in China by Structure 95 Rates, 2001-2011...... 35 Executive Summary 3 Nonresidential Building Stock in China...... 102 1 Summary Table...... 3 OVERVIEW 1 Construction Expenditures NONBUILDING CONSTRUCTION Market EnvironmenT in China by Type, 2011...... 50 1 Nonbuilding Construction Expenditures 2 Construction Expenditures in China 1 Gross Domestic Product of China...... 11 in China by Type...... 106 by Market, 2001-2021...... 53 2 Population of China...... 13 2 Nonbuilding Construction Expenditures 3 Households in China by Region...... 16 in China by Structure...... 109 RESIDENTIAL BUILDING 4 Manufacturing Value Added in China..19 3 Paved Roads in China by Region...... 112 5 Gross Fixed Capital Formation 1 New Housing Construction in China by Region...... 21 Expenditures in China, 2001-2021..65 REGIONAL TRENDS 6 Employment Trends in 2 New Housing Completions China, 2001-2011...... 24 1 Population of China by Region...... 120 in China, 2001-2021...... 68 7 Per Capita Gross Domestic Product 2 Gross Domestic Product 3 Housing Stock in China in China by Region...... 27 of China by Region...... 122 by Type, 2001-2021...... 78 8 Interest Rates in China, 2001-2011...32 3 Construction Expenditures 4 Average Living Space 9 Chinese Currency Exchange in China by Region...... 124 in China, 2001-2021...... 85 Rates, 2001-2011...... 34 4 Central-North Region of China: 10 Construction Pricing Deflators in China 37 Construction Expenditures...... 129 NONRESIDENTIAL BUILDING 5 Northeast Region of China: OVERVIEW Construction Expenditures...... 133 1 Nonresidential Building Construction 6 Central-East Region of China: Expenditures in China 1 Construction Expenditures Construction Expenditures...... 137 by Structure, 2011...... 96 in China by Type...... 49 7 Central-South Region of China: 2 Construction Expenditures Construction Expenditures...... 141 NONBUILDING CONSTRUCTION in China by Market...... 52 8 Southwest Region of China: 3 Construction Expenditures for Construction Expenditures...... 145 1 Nonbuilding Construction Expenditures Selected Countries, 2001-2011...... 55 9 Northwest Region of China: in China by Structure, 2011...... 110 4 Foreign Participation in China’s Construction Expenditures...... 149 2 Total & Paved Roads in Construction Industry...... 57 China, 2001-2021...... 112 INDUSTRY STRUCTURE RESIDENTIAL BUILDING REGIONAL TRENDS 1 Revenue Data: Selected Construction 1 Residential Building Construction Companies, 2011...... 154 1 Gross Domestic Product of Expenditures in China by Type...... 62 China by Region, 2011...... 122 2 New Housing Construction 2 Construction Expenditures in Expenditures in China...... 64 China by Region, 2011...... 125 3 New Housing Completions in China....67 List of Charts 3 Central-North Region of China...... 127 4 Residential Building Addition & 4 Northeast Region of China...... 131 Alteration Expenditures in China....73 5 Central-East Region of China...... 135 5 Residential Building Maintenance & Market EnvironmenT 6 Central-South Region of China...... 139 Repair Expenditures in China...... 75 1 Population of China by 7 Southwest Region of China...... 143 6 Housing Stock in China Age, 2001-2021...... 14 8 Northwest Region of China...... 147 by Type & Ownership...... 77 2 Households in China by 7 Average Living Space in China...... 85 Region, 2001-2021...... 17 INDUSTRY STRUCTURE 3 Employment Trends in 1 Construction Market Share in NONRESIDENTIAL BUILDING China, 2001-2011...... 25 4 Per Capita Gross Domestic Product China by Company, 2011...... 155 1 Nonresidential Building Construction in China by Region, 2011...... 28 Expenditures in China by Type...... 91

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Ongoing urbanization and industrialization, rebounding foreign investment funding, rising per- sonal income levels, and further population and household growth will all work to drive gains.

Expenditures to increase 8.8% yearly through 2016 Construction Expenditures in China Nonresidential (16.4 trillion 2010 yuan, 2016) Building Construction expenditures in China will 34% rise 8.8 percent per annum in real terms through 2016. Although growth will de- celerate from the rapid 2006-2011 pace, the country will continue to out-perform other major national construction mar- Nonbuilding kets. Ongoing urbanization and industri- 33% alization, rebounding foreign investment funding, rising personal income levels, and further population and household growth will all work to drive gains. How- ever, further growth will be prevented by a slowdown in the Chinese economy Residential Building through the forecast period, especially in 33% fixed asset investment.

Nonbuilding sector to remain fastest growing Construction expenditures in China are about equally split among the residential in urban areas and subsidies for altera- markets characterized by different building, nonresidential building, and tions of dilapidated farmhouses in rural climates, populations, and levels of nonbuilding construction segments, each areas) will also help spur gains in resi- economic development. Construction of which accounted for around one-third dential building construction spending. expenditures in the Northwest region are of construction spending in 2011. Non- expected to register the fastest gains of building construction will be the fastest Nonresidential building construction ex- any region in China, benefiting from the growing segment through 2016. Growth penditures will post the slowest gains in government’s “Great Western Develop- will benefit from state-led efforts to raise real terms through 2016. Advances will ment” strategy, which will result in and upgrade the country’s transportation be driven by robust gains in consumer sizable increases in spending on infra- infrastructure, which includes a national spending -- both in China and abroad -- structure and manufacturing facilities in high-speed railway and the “7918 for Chinese manufactured goods and this area. However, the Central-East will Network” national highway system. services. These increases will spur remain home to about 30 percent of the domestic and foreign direct investment country’s total population and 37 percent Residential building construction will in plants, commercial buildings, ware- of its economic output, supporting a vast advance at an 8.5% annual rate through houses, and shopping complexes. construction market that will account for 2016, primarily fueled by rising personal 42 percent of overall spending on con- income levels, household growth, and Northwest region to lead struction in China in 2016. Gains in the continuing urbanization. Government Central-East will be led primarily by efforts to improve living conditions for market gains growth in residential building construc- tion, benefiting from the high personal low-income earners (including the con- Although China is a single country, it income levels in the region. struction of affordable, low-rent houses consists of numerous distinct regional Copyright 2012 The Freedonia Group, Inc.

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Sample Text, TABLE IV-3

Table & Chart NEW HOUSING COMPLETIONS IN CHINA

Item 2001 2006 2011 2016 2021

New Housing Completions (mil sq m) 1287 1252 1687 2050 2400 Single Family 892 742 982 1100 1200 Multiple Family 395 510 705 950 1200

nonbuilding construction ¥/square meter 452 745 1180 1805 2522 single family 244 334 530 750 1000 Utilities multiple family 922 1343 2087 3025 4045 The utilities segment includes construction of electrical power plants, transmission towers, and lines; water supply and waste disposalValue of New House Completions (bil ¥)582 sam933 1991ple 3701 6052 facilities; oil and gas pipelines; and telecommunications structures. Single Family 218 248 520 825 1200 Utilities-related construction accounted for less than one-third of the Multiple Family 364 685tab 1471le 2876 4852 overall nonbuilding construction market in China in 2011. square meters/unit 110.0 112.9 114.8 115.8 115.9 Nonbuilding construction in the utilities segment is projected to single family 132.0 136.9 140.3 142.9 144.6 advance at an annual pace of 7.6 percent between 2011 and 2016. Utili multiple- family 80.0 89.9 91.6 95.0 96.8 ties will primarily benefit from continuing government efforts to improve living standards and meet utility samneeds forple further economic growth.New For Housing Units (000) 11700 11090 14700 17700 20700 example, massive spending will be put into new energy production, Singlesuch Family 6760 5420 7000 7700 8300 as nuclear and wind power, in order to support economic growth and Multiple Family 4940 5670 7700 10000 12400 ease China’s heavy dependence on importedtext oil and the highly polluting coal industry. Within the period of the Twelfth Five-Year Plan, China plans to spend more than ¥500 billion to build 30 nuclear power reac- tors in coastal areas to quadruple its nuclear power generating capacity. Eight wind power generating bases will be built during the same span, with a total installed capacity of 70 million kilowatts. At present, over 10 nuclear power plants are under construction in China, including Qinshan Plant Stage II in Zhejiang, Aoling Plant Stage I in Guangdong, Ningde Plant and Fuqiang Plant in Fujian, Hongheyan Plant in Liaoning, and Yangjiang Plant in Guangdong. Other major utilities-related construc- “More than 16 million new housing tion projects now underway include the South-North Water Diversion units were built in China in 2011, of project (scheduled to be completed by 2050) and the Xiangjiaba Hydro- which 46 percent were single family power Plant (expected to be completed in 2015). The South-North Water Diversion project intends to divert 44.8 billion cubic meters of water per houses and 54 percent multiple family year from South to North in China. Huge dams and long tunnels are be- houses. Multiple family units are com- ing built to facilitate movement of this vast quantity of water. By the end monly smaller than single family units of 2011, ¥137.6 billion had been invested in this project, while more than due to the limited space in high rise ¥64 billion will be added in 2012. Eventually, the total investment is apartments and their higher acquisition costs. In 2011, the average floor space Copyright 2012 The Freedonia Group, Inc. 113 for a new single family unit was about 141 square meters, compared to 91 square meters for an average new mul- tifamily unit. New housing units built in China are expected to reach ...” --Section IV, pg. 66

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Sample Profile, CHART VII-2

Table & Forecast CONSTRUCTION EXPENDITURES IN CHINA BY REGION, 2011 (10.8 trillion 2010 yuan)

Heilongjiang NORTHEAST 8% Jilin

Inner Mongolia NORTHWEST (Neimenggu) 6% Liaoning

Xinjiang Beijing CENTRAL NORTH Beijing 14% Tianjin Hebei

Ningxia Shandong Shanxi Qinghai Henan Tibet Gansu Jiangsu (Xizang) Shaanxi

Shanghai Shanghai SOUTHWEST sample Anhui 10% Hubei COMPANY PROFILES Sichuan Zhejiang Chongqing CENTRAL chart EAST Hunan Guizhou 43% Sinohydro Group Limited Jiangxi Fujian No. 22, Che Gong Zhuang West Road GuangxCENTRALi Yunnan SOUTH Guangdong Haidian District, Beijing 100048 19% China 86-10-5838-2888 Hainan http://www.sinohydro.com Revenues: ¥113.5 billionsam [US$17.7ple billion] (2011) Employment: 129,564 (2011) profile TABLE V-1 Key Services: construction and engineering services NONRESIDENTIAL BUILDING CONSTRUCTION Sinohydro Group is a hydraulics and hydroelectricity construction EXPENDITURES IN CHINA BY TYPE firm. In addition, the Company builds other public and marine works (billion 2010 yuan) projects, and produces and installs hydraulic steelworks, and electrome- chanical equipment. In October 2011, Sinohydro Group was listed on the Shanghai stock exchange. Item 2001 2006 2011 2016 2021

The Company participates in the Chinese construction industry through the provision of construction and engineering services for Construction Expenditures 2163 4983 10780 16400 23450 large-scale public works and civil engineering projects. Sinohydro % nonresidential building 34.6 35.7 34.7 33.9 33.1 Group renders these services for such building and nonbuilding projects as the construction and engineering of hydropower plants, water distri- Nonresidential Building Construction 749 1780 3740 5560 7760 bution networks, railways, subways, expressways, airport runways, ir- New Construction 557 1401sam 2965ple 4440 6240 rigation systems, water and sewage treatment plants, bridges, viaducts, Additions & Alterations 153 276 560 785 1060 housing, industrial facilities, public works, hospitals, and schools. Maintenance & Repairs 39 103t ab215le 335 460

In China, the Company has provided construction and engineer- price deflator (2010=100) 70.8 83.2 109.2 131.3 158.5 ing services for numerous projects, including the Three Gorges and Nonresidential Bldg Construction (bil ¥) 530 1481 4085 7300 12300 Longtan Hydropower Station projects, the Canton-Baiyun International airport terminal, Qiaoli Expressway and Shuinan Expressway, and the Jianan-Liacheng First Class Road Project. Sinohydro Group has

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Page 8 The Freedonia Group, Inc. 767 Beta Drive • Cleveland, OH • 44143-2326 • USA • Web site: www.freedoniagroup.com Tel US: 800.927.5900 or +1 440.684.9600 • Fax: +1 440.646.0484 • e-mail: [email protected]