China to overtake US as construction leader
China will lead the global construction industry out of its economic slump by 2011 and then overtake the United States as the world's largest construction market, according to a 10-year forecast released this week.
The report from Global Construction Perspectives and Oxford Economics said China would become the world's largest construction market as early as 2018, with a 19.1 per cent share worth almost US$2.4 trillion by 2020.
And it forecast that the end of the 'epic downturn' would see a new world order with China and India overtaking North America and Western Europe, which have borne the brunt of the global recession.
'We are close to a dramatic shift in the importance of emerging [construction] markets. The Dragons and Elephants of China and India have only felt a ripple of the economic crisis in their construction industries, and we predict astonishing growth rates for them over the next 10 years,' said Mike Betts of Global Construction Perspectives.
'The construction market in China is already enormous, at almost double the size of its nearest rival, Japan. The United States has for some time held the top spot.'
Despite the US' strong predicted growth over the next decade, China would still become the world's largest construction market by 2018, he said. The mainland's residential sector will lead a 130 per cent growth rate with infrastructure and non-residential projects experiencing higher growth.
Japan would suffer the slowest growth rate over the next decade, the forecast showed. Twenty years ago, Japan was the fastest-growing construction market, but protracted recession has seen expansion slow for the past 15 years.
'We expect that to continue,' said Betts. 'The big question is whether China is similar [to Japan] ... But unlike some nations, Beijing does not suffer shortfalls in public revenue. Stimulation programmes are in place and are being repeated. But the government is not over-borrowing to spend.'
Betts said that unlike Japan, China could sustain its growth rate over the medium and longer term.
China's construction was driven by need rather than direct government policy, he said. Secondly, financing appeared more achievable.
The US will see the strongest growth among developed countries, particularly during 2011-13.
'Despite the subprime crisis, house building will help fuel the recovery,' said Betts.
Developed countries had seen a slump in annual construction output of more than US$650 billion, the report said.
But the top 10 highest-growth markets by 2020 would be entirely composed of emerging markets, with Poland the only European country to feature on the list, it forecast.
Nigeria, Vietnam and Turkey would be among those experiencing strong growth over the next decade.
'We have identified the key drivers and data,' said Adrian Cooper of Oxford Economics. 'We predict that in just 10 years' time, construction in these markets will grow by an estimated 110 per cent and represent 17.2 per cent of [gross domestic product] in 2020.'
The global construction market is worth an estimated US$7.5 trillion, representing 13.4 per cent of global GDP. By 2020, construction would be a US$12.7 trillion global market with overall growth of 70 per cent in the next decade, the report said.