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Chinese firms dominate region’s projects market

5 March 2025

 

This package also includes: China construction at pivotal juncture

Chinese construction companies secured over $90bn in contracts in the Middle East and North Africa (Mena) in 2024. Their market share was 26% of the $347bn total for the region, according to regional projects tracker MEED Projects. 

The record-breaking performance underscores the growing influence of Chinese firms in the region’s projects market.

In the past decade, Chinese construction companies have steadily increased their foothold in the region. 

Between 2015 and 2019, the value of contracts won by Chinese firms ranged from $12bn to $23bn, reflecting a solid presence. There was a dip in 2016, when $12bn of awards reflected government spending cuts, and a second occurred in 2020, when lower oil prices and the impact of the Covid-19 pandemic led to awards of $13bn.

Since the pandemic, Chinese contractors’ orderbooks have grown sharply, with contract values rebounding to $26bn in 2021, dipping slightly in 2022 to $22bn. Then, in 2023, contracts awarded to Chinese contractors more than doubled to $51bn, rising even further to reach a record-breaking $90bn in 2024.

Leading players

According to MEED Projects, the top-ranking company by contract value and project volume based on work at the execution stage is China State Construction Engineering Corporation (CSCEC), with 47 projects totalling $23.5bn.

The other active companies are Sepco 3 Electric Power Construction Corporation, with $17.1bn of work across 14 projects; PowerChina, with $17bn across 22 projects; and Hualu Engineering & Technology, with $14bn of work concentrated in just three high-value projects. 

Sinopec and China Energy Engineering Corporation managed 19 and 14 projects, respectively, reflecting their broad engagement in the region.

China Harbour Engineering Company has a more diversified orderbook, with 32 projects worth a total of $8.1bn. Meanwhile, China Petroleum Engineering & Construction Corporation has 27 projects, amounting to $5.7bn.

China’s strengths

The record volumes of work secured by Chinese contractors in recent years can be explained by a combination of factors. 

Saudi Arabia has become the largest market for Chinese contractors in the Mena region

Traditionally, Chinese firms have enjoyed a lower cost base than their international competitors. This comes from lower manpower costs, access to cheaper materials and equipment, and financial support from state banks. 

Culturally, Chinese firms have typically had a different attitude to risk than many other contractors. Instead of seeking to turn a profit on specific projects, Chinese firms have entered markets cautiously and, as their knowledge of the local market grew, built a commanding long-term position.

More recently, the edge that Chinese contractors enjoy has come from the technical experience they have gained from delivering large-scale, complex projects in their domestic market. While in the past Chinese contractors were only considered capable of delivering basic construction work, they now have some of the best project references in the world. 

This was demonstrated in 2024, when CSCEC competed to complete the 1,000-metre-plus tower in Jeddah. The work was eventually given back to the incumbent Saudi Binladin Group, but when CSCEC was pursuing the contract, it boasted a portfolio of several completed super-high-rise and mega-tall projects, exceeding anything its competitors could demonstrate.

Meanwhile, in the UAE, the five groups that competed for the $5.5bn contract for Dubai Metro’s Blue Line extension all had at least one Chinese firm as a consortium member. The eventual winner was a team of Turkiye’s Limak Holding and Mapa Group with the Hong Kong office of China Railway Rolling Stock Corporation.

Oil and gas is another area where expertise has been developed. Twenty years ago, Chinese contractors could not prequalify for work on most oil and gas projects in the region, but today they compete for and win work from Mena’s leading oil companies. For example, Chinese firms won four of the 17 contracts awarded last year for the third expansion phase of Saudi Aramco’s Master Gas System project.

China’s domestic market has created a pool of resources that are being deployed internationally as the outlook for the Chinese construction market shows signs of weakness.

Chinese contractors have also been able to give their clients the solutions they require. 

In North Africa, they have raised finances for projects in countries that in some cases lack funding. This has enabled Chinese companies to develop a steady pipeline of projects across North Africa.

In February this year, China’s Tianchen Engineering Corporation was selected by state-owned Egyptian Petrochemicals Holding Company to execute three contracts to develop industrial projects in Egypt. In Algeria, the Agence Nationale d’Etudes et de la Realisation des Investissements Ferroviaires (Anesrif) awarded a $476m railway line upgrade contract in late 2024 to a joint venture of China Railway Sixth Group and the local Infrarer.

In Saudi Arabia, where funding is less of a concern, Chinese contractors have been able to deploy the large project teams required to deliver Riyadh’s Vision 2030.

Saudi foothold

Saudi Arabia has become the largest market for Chinese contractors in the Mena region, with $43bn of contract awards in 2024. This accounted for nearly 30% of the $143bn total for the kingdom last year.

Saudi Arabia’s Vision 2030 comes at a perfect time for Chinese contractors. Riyadh is hungry for resources to deliver its ever-growing roster of projects, including the five official gigaprojects, the requirements of which are extensive. 

At the top level, they require funding and financial support, but contractors and suppliers are also needed to deliver the projects. The contract award numbers show that Chinese companies looking to expand their international reach have latched onto this opportunity.

For China, Saudi Arabia is not just a volume play. Other markets in Asia and Africa also offer opportunities for Chinese contractors as part of Beijing’s $4tn Belt & Road Initiative, launched in 2013. In recent years, however, the problem for Chinese companies in many of these markets is that the soft loans provided to complete projects cannot be repaid.

The key difference for China when looking at Saudi Arabia is that it sees a reliable market that is financially strong and backed by oil wealth.

Beyond construction, Chinese firms are investing in the Saudi supply chain, which is a pillar of Vision 2030. Earlier this year, China Harbour Engineering Company inaugurated a 200,000-square-metre modular building factory at gigaproject developer Roshn’s Sedra project in Riyadh.

Other investments include a steel plate manufacturing complex in Ras Al-Khair Industrial City, developed by Saudi Aramco, the Public Investment Fund (PIF) and China’s Baosteel; and Lenovo’s Oasis Project, a $2bn technology hub in Riyadh, set to manufacture computer devices and serve as the company’s regional headquarters for the Middle East and Africa.

The economic forces that bring Saudi Arabia and China together are also being encouraged, particularly by the PIF.

Last year, agreements worth up to $50bn were signed with major Chinese financial institutions, including the Agricultural Bank of China, Bank of China and China Construction Bank, to ensure a steady stream of funding for Chinese firms working in the kingdom.

Broader outlook 

As the influence of Chinese contractors grows on the international stage, it has raised concerns. In 2022, the US Department of Defence released the names of what it calls “Chinese military companies”. The list included some of China’s largest contracting companies.

The economic forces that bring Saudi Arabia and China together are also being encouraged, particularly by the Public Investment Fund

In a statement at the time, the Department of Defence said it “is determined to highlight and counter the PRC [People’s Republic of China] Military-Civil Fusion strategy, which supports the modernisation goals of the People’s Liberation Army by ensuring its access to advanced technologies and expertise are acquired and developed by PRC companies, universities and research programmes that appear to be civilian entities”.

The sharp growth in contract awards secured by Chinese contractors in the Mena region since 2022 suggests this concern is limited outside the US.

Looking ahead, Chinese contractors are keen for more work in the Mena region. This was strongly signalled in mid-February, when CSCEC partnered with Cairo-based Al-Organi Group to secure contracts for the $24bn Ras El-Hekma project on Egypt’s Mediterranean coast. 

The 170 million-square-metre master-planned development, backed by Abu Dhabi-based ADQ, is one of the world’s largest ongoing construction projects. The CSCEC-Al-Organi partnership has set a target to secure more than $5bn in contracts on the scheme within the next three years.

With major schemes in Egypt, Saudi Arabia and the rest of the Mena region, Chinese firms will be well positioned to deliver the region’s project ambitions.

China construction at pivotal juncture
 

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Colin Foreman

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    Indrajit Sen