Rising Construction Activities In Q4 2021 Expected To Support China's Overall Construction Industry - ConsTrack360

Since October 2021, a number of infrastructure projects have been initiated in China. The announcement of major infrastructure projects comes from quickened fiscal stimulus and accelerated issuance of special bonds in the country. The construction boom in China is expected to offer support for fixed asset investment, which has been flat over the last few quarters. This growth in fixed-asset investment will offer a buffer against the rising economic challenges in Q4, resulting in stable GDP growth for the year.

Major infrastructure projects likely to support the market growth

In November 2021, Guangxi Zhuang Autonomous Region in South China launched a batch of construction projects, which involves a total investment of US$29.15 billion. These major infrastructure projects cover a wide range of sectors, such as new energy, transportation, basic infrastructure, and logistics. Moreover, Xi'an, capital of Shaanxi Province in Northwest China, inaugurated 100 power grid projects in November 2021. Notably, the power grid projects involve a total investment of around US$10 billion.

On November 5, 2021, Hubei Province in Central China initiated 805 projects involving a total investment of US$70.8 billion. Moreover, investment in Q4 is also expected to grow as the country has been ramping up fiscal policy by issuing more special bonds to uplift the Chinese economy, facing increasing internal and external pressure over the last few quarters.

Notably, the fixed-asset installment came to a halt during Q3 2021. During the first three quarters, the fixed-asset investment in the country increased 7.3%, which represents a slowdown of 1.6% compared to the first eight months, according to the data released by the National Bureau of Statistics (NBS).

With the economic growth in the country slowing down in the second half of 2021, investment and uptick in the construction activities during Q4 2021 will help to smooth the average economic growth rate in China for the full year. Notably, the projects that are expected to be finalized by December 2021 will allow construction firms to buy equipment and facilities at the start of 2022. This will be another strategic deployment that is expected to help China transit to 2022 in a better position compared to 2021.

In October 2021, the Ministry of Finance in China said that the issuance of local governments' special-purpose bonds was ramped up since August 2021. It is projected that the issuance of these special-purpose bonds will be completed by November 2021. Notably, the net bond issuance reached 2.22 trillion yuan in the first three quarters of 2021. According to the Ministry of Finance, this accounts for 61% of the annual quota.

While the slowdown in factory production has had a negative impact on the economy in October, an increase in consumption because of the recently concluded Double 11 shopping festival and the growing demand for upcoming New Year and Spring Festival holidays are expected to support the economic revival. Notably, China's annual economic growth rate is well ahead of when compared to the rest of the world. ConsTrack360 expects that the Chinese economy and trade will continue to boost the global recovery.

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This release was published on openPR.