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China Construction Industry

Overview

The Chinese construction industry is booming. While many countries are enjoying a building frenzy none can compete with the largest building site of all. China is using half the world’s concrete and a third of its steel for its numerous ambitious projects. Beijing and Shanghai are desperate to place themselves firmly on the architectural stage with buildings such as the upcoming CCTV headquarters and the Olympic Village. Each year China spends approximately $375 billion on construction, nearly 16% of its Growth Domestic Product (GDP). Construction in China has been experiencing consistent growth over the last few years with investment in infrastructure being a key component of China’s tenth five year plan (2001-2005). By the end of 2001 36.69 million people in China worked in the construction industry.

Infrastructure and Sustainable Development

The tenth five year plan (2001-2005) has heavily focused on building roads, rail systems, bridges, ports and airports. This has lead to an increasing number of foreign companies and investors becoming involved in China. The construction industry at the turn of the century had a significant effect on the sustainable development of China, accounting for approximately 6.6% of the countries GDP over the previous 5 years. This made construction the fourth largest industry in China.

At the end of 2004 the Chinese government issued new regulations on foreign investment in infrastructure. By removing the restrictions on the flow of foreign capital, this has encouraged foreign businesses in search of profit to help develop the network. The improvement in the infrastructure in China has allowed foreign investors to access some of the most remote provinces. This improvement, especially in western regions of China, has dramatically increased the demand for quality engineers from abroad.

Raw Materials

A vast amount of raw materials are needed to feed China’s construction industry. Therefore it is not surprising that eight of the top forty largest companies in China deal in raw materials. When taking sales, profits, assets and market value into account Baoshan Iron & Steel is China’s largest materials company, and the eighth largest company in the country. As of the end of the fiscal year 2006 Baoshan’s profits were approximately $1.6 billion.

The Future – Costs and Benefits

It is predicted that spending in the construction industry in China will grow 9.7% annually until 2010, non-residential buildings and infrastructure will remain the most significant sector. Continued construction will add to the steady increase in living standards in China. Yet, China’s booming economy and astonishing levels of construction are having a damaging impact on the environment.

China’s addiction to construction has led to an unquenchable thirst for energy, and China has become the second largest consumer behind the USA. However, China’s energy resources are largely based on burning fossil fuels, thus releasing huge quantities of carbon emissions. A large proportion of China’s energy comes from burning coal, approximately 78% of the energy industry.

China is an active participant in climate change talks and multi-lateral environmental negotiations. Although a member of the Kyoto protocol, under the current agreement China is not required to reduce its emissions because it is still classified as a developing country. However, in June 2007 the Netherlands Environmental Agency announced that China has exceeded the USA as the largest emitter of carbon dioxide, releasing 6,200 million tonnes in 2006 compared to the USA’s 5,800 million tonnes.

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