meed-logo

line1 line2 line3
SIGN IN / REGISTER

China construction at pivotal juncture

5 March 2025

 

This package also includes: Chinese firms dominate region’s projects market

China’s construction industry remains one of the largest in the world, reflecting its ongoing urbanisation and development initiatives.

Over the past 10 years, the industry has experienced significant growth, with robust public investment and an acceleration of infrastructure projects. In 2024, China’s construction market was estimated to grow by about 4% in real terms, driven by substantial investments in the infrastructure and energy sectors, according to GlobalData.

Decisive moment

In 2025, China’s construction industry stands at a pivotal juncture, poised for growth yet facing a range of challenges. The industry must navigate a complex landscape of regulatory changes, market saturation and economic shifts.

The infrastructure sector is a cornerstone of China’s construction growth, with output expected to reach $1.2tn by 2027, growing at a compound annual growth rate (CAGR) of 8.5%. The growth in the infrastructure market is fuelled by government plans to build 25,000 kilometres of highways, 3,000km of railways and 30 civil airports by 2026. These initiatives aim to enhance connectivity and support economic development, aligning with China’s long-term vision of establishing a comprehensive transport network by 2050.

The commercial construction sector is projected to grow at a CAGR of 8.5%, reaching $430bn by 2027. This growth is driven by increased domestic tourism and robust retail activity.

Industrial construction is anticipated to grow at a CAGR of 7.6%, reaching $370bn by 2027. This growth is propelled by advancements in high-tech manufacturing and the burgeoning demand for new energy vehicles.

The energy sector is projected to grow at a CAGR of 7.4%, reaching $1tn by 2027. Government initiatives to enhance energy generation and storage capacities, including investments in renewable energy, are key drivers of this growth.

Real estate

Despite ongoing urbanisation and housing demands, the residential sector is estimated to grow at a slower CAGR of 4.1%, reaching $1.4tn by 2027. The sector faces challenges such as falling new home prices, declining property sales and rising debt among property developers.

Chinese contractors also face challenges arising from regulatory and policy changes. The government has tightened regulations on property purchases and financing to stabilise the housing market, which could lead to reduced liquidity for construction companies. The implementation of stricter environmental regulations further complicates project execution, as contractors must invest more in sustainable practices and technologies to comply with new standards.

Chinese construction firms are increasingly turning to international markets to diversify their operations

Rising costs of construction materials and supply chain disruptions are another challenge. Global inflation and geopolitical tensions have led to increased prices for essential materials such as steel, cement and timber.

As the Chinese economy shifts towards technology and automation, labour shortages are a growing concern. Fewer workers are entering the construction sector, resulting in a shortage of skilled labour, which can delay project timelines and increase labour costs.

Market dynamics are another factor. After years of rapid growth, China’s construction market is highly competitive, with numerous players vying for limited projects. 

Competition can lead to aggressive bidding practices, resulting in reduced profit margins for contractors. Market saturation in certain regions means that contractors must continually innovate and differentiate their services to secure contracts.

Chinese construction companies are increasingly turning to international markets to diversify their operations and tap into emerging opportunities. This expansion is driven by the need to mitigate domestic challenges and leverage China’s substantial construction expertise.

As well as the Middle East, key overseas markets include Southeast Asia with countries such as Indonesia, Vietnam and the Philippines significant markets for Chinese construction firms. The Belt and Road Initiative (BRI) has facilitated numerous infrastructure projects in these countries, including highways, railways and energy facilities. These projects enhance regional connectivity and economic growth, aligning with China’s strategic interests.

Chinese construction firms have established a strong presence in various African nations, engaging in large-scale projects such as roads, bridges and energy plants.

Complex landscape

Chinese construction companies face several challenges in the international landscape. Navigating local laws and regulations can be complex, often requiring partnerships with local firms. Understanding and complying with diverse regulatory environments is crucial for successful project execution.

Political instability in certain regions can pose risks to project completion and profitability. Chinese firms must assess and manage these risks to ensure the viability of their international ventures.

Local and international competitors create a challenging environment, necessitating competitive pricing and innovative solutions. 

Chinese firms must differentiate themselves through quality, efficiency and technological innovation to secure contracts. 

Chinese firms dominate region’s projects market

https://image.digitalinsightresearch.in/uploads/NewsArticle/13451627/main.jpg
Colin Foreman

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Saudi Arabia names Expo 2030 Riyadh Company CEO

    23 June 2025

    Saudi sovereign wealth vehicle the Public Investment Fund (PIF) has named Talal Al-Marri as the CEO to lead the newly-launched Expo 2030 Riyadh Company (ERC).

    In an official statement published by the Saudi Press Agency, the PIF said that Al-Marri "is expected to lead the Expo 2030 Riyadh team in delivering a world-class exhibition that reflects the kingdom’s ambitions and rapid development, in alignment with the objectives of Saudi Vision 2030".

    Al-Marri has previously held several senior executive roles at Saudi Aramco, including president and CEO of Aramco Europe, senior vice president of community services and senior vice president of industrial services.

    The announcement follows the establishment of ERC as a wholly-owned subsidiary of the PIF that will build and operate facilities for Expo 2030.

    In a statement, the PIF said: “During its construction phases, Expo 2030 Riyadh and its legacy are projected to contribute around $64bn to Saudi GDP and generate approximately 171,000 direct and indirect jobs. Once operational, it is expected to contribute approximately $5.6bn to GDP.”

    The masterplan for Expo 2030 Riyadh encompasses an area of 6 square kilometres, making it one of the largest sites designated for a World Expo. Situated to the north of the city, the expo site will be located near the future King Salman International airport, providing direct access to various landmarks within the Saudi capital.

    Countries participating in Expo 2030 Riyadh will have the option to construct permanent pavilions, contributing to the event's legacy. This initiative is expected to create opportunities for business and investment growth in the region.

    The expo is projected to attract over 40 million visitors. After the event concludes, ERC plans to convert the expo's secured area into a global village, to serve as a multicultural centre for retail and dining. This development will also include an international residential community with various amenities, with a focus on sustainable tourism practices.

    Expo 2030 Riyadh will run from 1 October 2030 to 31 March 2031.

    In mid-May, MEED reported that Riyadh had begun talks with stakeholders in preparation for the start of the construction works for the event.

    The discussions were understood to have been held with the Royal Commission for Riyadh City and the PIF.

    German architectural firm Lava Architects and US-based engineering firm Jacobs are assisting with the project masterplan and the design of infrastructure for the site.

    READ THE JUNE 2025 MEED BUSINESS REVIEW – click here to view PDF

    Gulf accelerates AI and data centre strategy; Baghdad keeps up project spending, but fiscal clouds gather; Banking stocks rise despite lower global oil prices

    Distributed to senior decision-makers in the region and around the world, the June 2025 edition of MEED Business Review includes:

    > GULF PROJECTS INDEX: Gulf projects index leaps 4.3%
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14116512/main.jpg
    Yasir Iqbal
  • Adnoc prepares tender for next Upper Zakum field expansion

    23 June 2025

    Register for MEED’s 14-day trial access 

    Adnoc Offshore is preparing to start the tendering process for the next expansion phase of the Upper Zakum field development in Abu Dhabi, the objective of which is to increase the asset’s oil production potential to 1.5 million barrels a day (b/d).

    MEED reported in November that the offshore oil and gas production business of Abu Dhabi National Oil Company (Adnoc Offshore) had awarded a contract for pre-front-end engineering and design (pre-feed) and feed services on the project to France-headquartered contractor Technip Energies.

    A kick-off meeting between Adnoc Offshore and Technip Energies took place on 21 November, it was previously reported.

    Pre-feed and feed works on the project, which is known as UZ 1.5MMBD, are in an advanced stage, according to sources. “Adnoc Offshore could be expected to issue the main engineering, procurement and construction (EPC) tender as early as July,” one source said.

    Located 84 kilometres offshore in Abu Dhabi, Upper Zakum is the world’s second-largest offshore oil field and fourth-largest oil field.

    The UZ 1.5MMBD project is the latest crude output expansion project that Adnoc Offshore has undertaken at the Upper Zakum field development.

    Upper Zakum expansion

    The first phase of the programme to raise the Upper Zakum offshore field development’s oil production capacity to 1.2 million b/d was launched in 2019. The initial goal was to increase the field’s output potential to 1 million b/d by 2024, which was later increased to 1.2 million b/d, with the project execution timeline eventually extended.

    In April last year, MEED reported that Adnoc Offshore had awarded the main EPC contract for the UZ 1.2MMBD EPC-1 project to UAE-based Target Engineering Construction Company. The value of the contract was estimated to be $825m.

    The project’s main scope involves the EPC of several surface facilities and plants at the Upper Zakum offshore development’s four main artificial islands: Al-Ghallan, Umm Al-Anbar, Ettouk and Asseifiya – also known as Central Island, West Island, North Island and South Island, respectively.

    Spanish contractor Tecnicas Reunidas won the contract for the feed works on the UZ 1.2MMBD EPC-1 project in 2019. UK-headquartered Wood Group was appointed as the project management consultant for the EPC phase.

    In November, MEED reported that Adnoc Offshore had also selected Target for the second phase of the Upper Zakum 1.2 million b/d project (UZ 1.2MMBD EPC-2). The value of the contract was estimated to be about $500m, according to sources.

    Target began work on the project in December, MEED previously reported.

    The scope of work on the UZ 1.2MMBD EPC-2 project covers the EPC of several structures on Assefiya Island.

    Adnoc Offshore performed the feed work on the UZ 1.2MMBD EPC-2 project in-house.

    Upper Zakum oil production

    Adnoc Offshore has committed to a total capital expenditure budget of approximately $30bn, along with its operating partners in the Upper Zakum hydrocarbons concession, Japan Oil Development Company (Jodco) and US-based ExxonMobil. 

    The strategic objective is to first raise the asset’s oil output from 640,000 b/d to 750,000 b/d through the UZ 750 project, then to 1.2 million b/d through the two phases of the ongoing UZ 1.2MMBD project, and eventually to 1.5 million b/d.

    Zakum Development Company (Zadco), which later merged into Adnoc Offshore, awarded EPC contracts for the UZ 750 project in 2012 and early 2013.

    The $817m first package was awarded to a consortium of Abu Dhabi’s NMDC Energy (then known as National Petroleum Construction Company) and Technip Energies. Package two, the project’s largest EPC package, worth $3.7bn, was awarded to a consortium of UK-headquartered Petrofac and South Korea’s Daewoo Shipbuilding & Engineering.

    EPC work on UZ 750 began in 2014 and was completed in 2022.

    In October 2022, Adnoc Group subsidiary Adnoc Drilling set a world record for drilling the longest oil and gas well at the Upper Zakum concession, stretching 50,000 feet.

    The extended-reach wells will tap into an undeveloped part of the Upper Zakum reservoir, potentially increasing the field’s production capacity by 15,000 b/d without expanding or building any new infrastructure, Adnoc said.

    ALSO READ: Adnoc signs $60bn of agreements with US companies

    READ THE JUNE 2025 MEED BUSINESS REVIEW – click here to view PDF

    Gulf accelerates AI and data centre strategy; Baghdad keeps up project spending, but fiscal clouds gather; Banking stocks rise despite lower global oil prices

    Distributed to senior decision-makers in the region and around the world, the June 2025 edition of MEED Business Review includes:

    > GULF PROJECTS INDEX: Gulf projects index leaps 4.3%
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14115851/main5852.jpg
    Indrajit Sen
  • Beltone Leasing secures $20m funding from German investor

    23 June 2025

    Register for MEED’s 14-day trial access 

    Beltone Leasing & Factoring has signed a $20m funding agreement with Germany-based Finance in Motion to expand lending to small businesses and support green finance initiatives across the Middle East and North Africa (Mena).

    The funding is evenly split between two investment vehicles: $10m from the Sanad Fund for micro, small and medium enterprises, and $10m from the Green for Growth Fund. Both facilities have a tenor of five years.

    Beltone said the funding will be used to provide finance for underserved businesses and low-income households, and to support renewable energy, energy efficiency and sustainable resource projects.

    In 2021, the Egyptian Financial Regulatory Authority introduced mandatory environmental, social and governance (ESG) and climate-related financial disclosures for listed companies and non-bank financial institutions. The first reporting cycle began in 2023. The agreement comes as financial institutions in the region face growing pressure to meet environmental and social targets while expanding credit to the private sector.

    Beltone Leasing & Factoring is a wholly owned subsidiary of Beltone Holding. The company offers financing solutions including leasing and factoring products to corporate and SME clients.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14115758/main5331.jpg
    Sarah Rizvi
  • PIF firm prepares Pirelli tyre plant contract award

    23 June 2025

     

    Saudi Arabia’s Mena Tyre Company is preparing to award a contract to build a Pirelli tyre manufacturing plant in King Abdullah Economic City (KAEC).

    MEED understands that the contract is being finalised and is expected to be signed within the next few weeks.

    The tender notice was issued in December last year, and firms submitted their final offers in April.

    Mena Tyre Company is a joint venture of Saudi sovereign wealth vehicle the Public Investment Fund (PIF) and Italian tyre maker Pirelli Tyre. The PIF holds a 75% stake in the venture, with Pirelli holding the remaining 25%.

    The plant is expected to start production in 2026. It will make tyres for passenger vehicles under the Pirelli brand. It will also manufacture and market tyres under a new local brand targeting the domestic and regional markets.

    The plant is expected to have the capacity to produce 3.5 million tyres a year.

    In March, MEED exclusively reported that the PIF and Pirelli Tyre had tendered the contract to build an estimated $550m tyre manufacturing plant in KAEC.

    UK-based firm Jones Lang LaSalle is the project consultant.

    The project is located within the King Salman Automotive Cluster of KAEC, which was officially announced on 6 February by Saudi Arabia’s Crown Prince Mohammed Bin Salman Al-Saud. 

    The move was part of the kingdom’s push to become a dominant player in the Gulf’s automotive sector. It follows investment in recent years in infrastructure, supply chain development and research to attract global automakers to Saudi Arabia and create an ecosystem for electric vehicle (EV) production in particular – all driven by the Saudi Vision 2030 mandate to diversify the economy.

    The cluster is expected to be a major contributor to the National Industrial Development and Logistics Programme (NIDLP), which aims to develop high-growth sectors locally and attract foreign investment.

    Several schemes supporting the NIDLP have made significant progress in recent years, including multibillion-dollar EV manufacturing plants backed by the PIF, such as assembly facilities for US-based Lucid Motors and Ceer, the kingdom’s first homegrown EV brand, launched by the PIF in collaboration with Taiwan’s Foxconn.

    These facilities are supported by the National Automotive & Mobility Investment Company (Tasaru Mobility Investments), which the PIF established in 2023 to develop the kingdom’s local supply chain capabilities for the automotive and mobility industries.

    The PIF then signed several agreements with international companies, including South Korean car maker Hyundai and Pirelli, to establish production facilities in KAEC's automotive cluster.

    READ THE JUNE 2025 MEED BUSINESS REVIEW – click here to view PDF

    Gulf accelerates AI and data centre strategy; Baghdad keeps up project spending, but fiscal clouds gather; Banking stocks rise despite lower global oil prices

    Distributed to senior decision-makers in the region and around the world, the June 2025 edition of MEED Business Review includes:

    > GULF PROJECTS INDEX: Gulf projects index leaps 4.3%
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14115309/main5503.jpg
    Yasir Iqbal
  • Bahrain opens highway consultancy bids

    23 June 2025

    Bahrain’s Ministry of Works has opened the commercial bids that it received from firms for a contract covering the pre-contract engineering consultancy services for the next phase of the Sheikh Jaber Al-Ahmed Al-Sabah Highway upgrade.

    According to the official notice published by the Bahrain Tender Board, the scope of the contract includes designs to update the highway to at least five lanes each way, update utility corridors, revise the stormwater design and prepare contract drawings and tender documents.

    The bidders include:

    • Parsons Corporation (US) – $1.5m
    • Aecom (US) – $1.6m

    In March, the Kuwait Fund for Arab Economic Development and Bahrain’s government signed a KD10m ($32.4m) loan agreement to fund the second phase of the Sheikh Jaber Al-Ahmed Al-Sabah Highway, which is expected to cost about $404m.

    According to data from regional projects tracker MEED Projects, the construction on the project’s first phase was completed in 2020.

    A joint venture of local firm Nass Contracting and Kuwait’s KCC Engineering & Contracting undertook the project’s main construction works.

    According to a report by UK data analytics firm GlobalData, Bahrain’s construction industry is expected to grow by 3.5% in real terms in 2025, supported by public and private sector investments in industrial, commercial and energy construction projects, coupled with the rise in the value of awarded tenders.

    The report adds that the total value of tenders awarded grew by 145.2% year-on-year in 2024, preceded by an annual growth of 114.1% in 2023.

    The infrastructure construction sector is expected to grow by 3.5% in 2025, before registering an annual average growth of 5.4% in 2026-29, supported by investments in major road and airport construction projects.

    READ THE JUNE 2025 MEED BUSINESS REVIEW – click here to view PDF

    Gulf accelerates AI and data centre strategy; Baghdad keeps up project spending, but fiscal clouds gather; Banking stocks rise despite lower global oil prices

    Distributed to senior decision-makers in the region and around the world, the June 2025 edition of MEED Business Review includes:

    > GULF PROJECTS INDEX: Gulf projects index leaps 4.3%
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14115007/main.gif
    Yasir Iqbal