Wenyi Zhang
Research expert covering Greater China
Construction industry in China - statistics & facts
Despite significant growth in past decades, China is still a developing country. While large metropolitan regions are modern and provide a high living standard, many rural and remote areas are still underdeveloped. These regions still require significant investments into real estate and infrastructure although urbanization is further increasing the demand for housing in large cities.
Investment into infrastructure is an important policy tool for the Chinese government to tackle economic crisis or downturn, but it comes at a cost. For instance, in response to the 2008 financial crisis, Beijing set up a four trillion yuan economic stimulus plan, with a significant share directed towards infrastructure projects. The resulting construction projects increase the GDP and distribute the money throughout the economy. However, the downside is that these investments often focus on large, prestigious projects instead of affordable housing which could make a more significant improvement to people's living situation. In addition to that, infrastructure investments are part of the increasing expenditures of local governments that contribute to their ballooning debt burden.
Employment in rural and remote areas can be scarce and wages are often low. Therefore, for a significant share of people in China working in larger cities is the only option to earn a livable income. Many industries in China rely on this cheap and flexible labor. Among them is the construction industry who hires migrant workers for the duration of the construction project. In many cases, living and working conditions are strenuous and the social status of the workers and type of employment makes many migrant workers vulnerable to exploitation. Nonetheless, because wages in the construction industry are comparably high, it is an essential and popular way for migrant workers to provide for their families at home.
Buttress of the economy
In many ways, the construction of new real estate is essential for the country. For instance, as people move to urban areas to work, further demand is created for housing in large cities. In addition to that, many people with the means to invest see real estate as an attractive option, which drives up demand. For local governments, the sale of land-use rights constitutes a significant revenue stream which means that local governments depend on continuous real estate development, often regardless of demand.Investment into infrastructure is an important policy tool for the Chinese government to tackle economic crisis or downturn, but it comes at a cost. For instance, in response to the 2008 financial crisis, Beijing set up a four trillion yuan economic stimulus plan, with a significant share directed towards infrastructure projects. The resulting construction projects increase the GDP and distribute the money throughout the economy. However, the downside is that these investments often focus on large, prestigious projects instead of affordable housing which could make a more significant improvement to people's living situation. In addition to that, infrastructure investments are part of the increasing expenditures of local governments that contribute to their ballooning debt burden.
Feeding China
Since the construction sector draws resources from different industries, it employs many people in China. Not including large state-owned construction companies, private enterprises alone engage over 20 million people before the COVID-19 pandemic. The industry is also closely intertwined with various sectors along the value chain through the demand for machinery and building materials. As a result, many workers in China rely on the performance of the construction industry.Employment in rural and remote areas can be scarce and wages are often low. Therefore, for a significant share of people in China working in larger cities is the only option to earn a livable income. Many industries in China rely on this cheap and flexible labor. Among them is the construction industry who hires migrant workers for the duration of the construction project. In many cases, living and working conditions are strenuous and the social status of the workers and type of employment makes many migrant workers vulnerable to exploitation. Nonetheless, because wages in the construction industry are comparably high, it is an essential and popular way for migrant workers to provide for their families at home.
