international
construction
january-february 2015
REGIONALREPORT
22
Hopes for growth
Timetric’s Construction Intelligence Centre, explained, the
upturn experienced in the residential sector had been driven by
government targets.
Thesewereoutlined in itsnationalNew-typeUrbanisationPlan
(2014-2020) outlining a drive towards 60% of the population
living in cities within the next five years, compared to its present
level of 54% of people.
Significantly, in January 2014, the government relaxed its one
childpolicy and this has since seennearly1million couples apply
for permission to enlarge their families.This is likely to provide
furthermedium-term stimulus to residential development.
Mr Richards said, “The market buoyancy reflects a number
of factors: continued rapid urbanisation and industrialisation,
population growth, rising household incomes and government
investment in expanding andupgrading physical infrastructure.
“There arenumerousmega-projects indevelopment in the areas
of transport infrastructure, city subways, airports, utilities and
wastemanagement, as well as power generation.
“This plan shows the need for further investment in urban
infrastructure such as new expressways and railways to link all
cities withmore than 200,000 people by 2020, and high-speed
rail services to connect cities withmore than a halfmillion.”
The analyst added that the country also needed to invest
in public-funded affordable housing projects. This includes
ambitions to provide 23% of the urban population with
affordable housing by 2020 requiring more than 4million new
housing units a year tobe built over the next five years.
Despite such policies, housing supply issues have emerged and
led to some emergingurbandevelopments such asChenggong in
SouthWest China being labelled as “ghost cities”. According to
theWorldBank, themajor new community had been a hit by a
significant portionof a schemeof 100,000 apartments remaining
unsold since its creation.
Similarly, in Kangbashi - the new city of Ordos, northern
China, remains sparsely populated, which the government is
attempting to address by inviting rural populations to take up
residence.
According to Chinese state media, there are an estimated 45
million people across the country employed in the construction
sector. It remains at the heart of the economy, with residential
schemes still ranking high in its overall contribution.
National statistics revealed that total investment in real estate
reached US$ 1.3 trillion (with residential building investment
of US$ 910 billion and commercial and office building at
US$257billion).
However, health and safety standards remain one of the main
issues facing the industry. This was highlighted by Terex China
president Ken Lousberg at the International Rental Conference
held in Shanghai last November. He said the company had
a “moral obligation” to help raise levels of construction best
practice.
Consequently, the Chinese government has announced that it
will not issue construction permits to projects without worker
insurance.
Pressure on construction companies
While conditions have been challenging within the Chinese
construction market, manufacturers remain hopeful that an
improving picturemay soon emerge in the sector.
DaveBeatenbough, vicepresident for researchanddevelopment
at Liugong, expressed his opinion that the recent construction
challenges in China had begun to “reach the bottom of the
trough” and a sense of gradual recoverywas starting to take hold.
>
He said, “Themarket inChina during 2014has beendown by
15%, whichwe have felt as everyone else has done. But we have
had some good runs in terms of excavators for the region.
“There has been some adjustment to that rapid pace that had
left a lot of excess productionof around100,000machines in the
market, though that’s something we had seen coming and taken
account of with our ownproduction levels.
“Excavators have been our biggest area of focus for us this
year and we have been working really hard on the mid sector
of around 20 tonnes, as well as ranges between 36-50 tonnes,
including the 950E.”
A similar picture emerged for other companies including JCB.
Its sales managing director Guy Robinson said it had been “an
extremely tough” year for its operations inChina.
However, he explained there had been an encouraging picture
with its excavators, which recorded anupturn inmarket share.
He said, “We expect theChinesemarket for excavators tobeflat
in2015, butwewill be addingnewmodels toour range.Having
a plant in the country has helped to raise our profile but, more
significantly, the localisation ofmanufacturing has cementedour
position as a credible construction equipment manufacturer in
China.”
Plans are still
in progress
for Changsha’s
ambitious Sky
City tower –
which it is
claimed could
be erected in 90
days.
