Infrastructure pie for foreign firms could be worth US$300b
The value of the mainland's infrastructure market available to private and foreign companies could leap to US$300 billion over the next five years, surpassing their global total for the past five years, according to an industry report.
In addition, total mainland infrastructure spending could create 100 million jobs over the same period.
Partly boosted by the country's 4 trillion yuan (HK$4.54 trillion) stimulus package, spending on infrastructure would reach US$1.3 trillion from this year to 2013, predicted McKinsey & Co.
This is more than double the US$600 billion spent from 2004 to last year, according to the international consultancy.
'In coming years, China will be a significant part of global infrastructure investment,' said Evan Auyang, a McKinsey associate partner. 'It would be prudent for people to treat China seriously as an infrastructure market.'
Of the US$1.3 trillion total, US$300 billion will come from foreign and private investors, more than four times the US$70 billion of the past five years, said Mr Auyang. In comparison, private spending on global infrastructure totalled US$250 billion from 2004 to 2008.
Mr Auyang admitted that in sectors such as rail construction, state-owned enterprises had better access than foreign players to projects on the mainland.
But other sectors, such as technical systems and equipment sales, are more open to foreign firms.
McKinsey predicted total mainland rail spending would rise 4.5 times from US$100 billion in the past five years to US$450 billion in the coming five years.
'I believe China's rail investment in the next five years will be bigger than the rest of the world in the past two decades,' said Tao Dong, a Credit Suisse economist.
McKinsey forecast the US$1.3 trillion in mainland infrastructure spending would generate more than 100 million new jobs in the next five years. Sixty per cent would be directly involved in infrastructure.
Mr Auyang stressed that there would be 100 million new jobs but that might not translate into that many new workers, since one worker could take several jobs over the next five years.
'I see nine million migrant workers losing their jobs,' said Mr Tao.
Mainland macroeconomic policy has shifted to maintaining gross domestic product growth at about 8 per cent, below which rising unemployment becomes a risk, said Jing Ulrich, China equities chairman at JP Morgan.
Investor bonanza
Technical systems and equipment sales open to overseas investors
McKinsey says rail spending in the next five years will rise by a factor of: 4.5
