China's booming construction sector to continue in 2017

It is poised for a 7% growth next year, thanks to fiscal stimulus.

Growth will accelerate in China's construction sector in 2016 and remain elevated in 2017 as the fiscal stimulus and start of the 13th Five Year Plan revive the industry following a weak 2015, says BMI Research.

The research firm noted that infrastructure will be the driving force behind stronger growth, with airports, water, rail, power and roads & bridges supporting growth.

"Over our 10-year forecast period growth will remain in a deceleration trend in line with Beijing's broader economic shift to a consumption-led economic model," it said.

Here's more from BMI:

We have revised up our outlook for China's construction sector in 2016 and 2017 to 7.1% and 7% respectively as the fiscal stimulus and 13th Five Year Plan prompt an uptick in investment.

We maintain our expectation that growth will remain on a slowing trajectory over the coming decade.

We have updated our data for the sub-sectors of the construction sector with new historic and forecasted data to better reflect the volume of industry value generated from the construction of assets.

Our new data indicates a larger importance of the roads & bridges segment in the transport sector and the water segment in the energy & utilities industry.

Infrastructure will be a bright spot in China's construction industry over the coming five years, supported by investment into airports, railways and water infrastructure in line with the goals of regional integration and addressing environmental and urbanisation challenges outlined in the 13 Five Year Plan.

Two major driving forces behind infrastructure value - power and roads & bridges, accounting for 45% and 20% respectively, will sustain robust growth over the same period.

China's residential building sector will see growth accelerate in 2016 (to 5%) as greater land supply is made available in an effort to rebalance supply
and demand and dampen the overheating housing market.

Over the longer term, the pace of growth in China's housing sector remains unsustainable and therefore growth in residential building will slow over the coming decade.

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