China’s construction sector will benefit from the Belt and Road Initiative in the next decade, according to Robin Xu, head of Asia industrials research at UBS Investment Research.
Chinese construction firms have a large share of the international contracting market for electricity, water supply, and transport, Xu said at a media conference on May 30. Major Chinese cement makers plan to increase their capacity in countries along the route of the BRI, and UBS expects higher steel exports to these countries will ease the overcapacity in China.
Chinese original equipment manufacturers in construction machinery are expected to gain a larger share of emerging markets thanks to their competitive costs, attractive prices, and high quality, as well as their strong sales networks and services.
China’s exports of capital goods are rising steadily, and the country is moving fast in the transition to using domestic products rather than imported ones thanks to the BRI, Xu stated, adding that the self-sufficiency rate will jump from lower than 50 percent in 2015 to over 90 percent in most industries in 2025.
The nation’s power grid and photovoltaic and new energy vehicle battery sectors are already dominated by domestic suppliers, UBS said, noting that battery materials and construction machinery will likely become the most active industries for exports in the next few years.
Investment in infrastructure fixed assets will rise 6 percent this year, slower than the last year’s 11.5 percent, and the compound annual growth rate will be 2 percent between next year and in 2025, UBS estimated.
Initiated in 2013, the BRI encompasses 64 countries in Southeast Asia, South Asia, Central Asia, West Asia, and Central and Eastern Europe.
Chinese contractors earned USD85 billion in revenue in BRI countries last year and penned new contracts worth USD130 million, accounting for 55 percent of their total overseas income and 51 percent of new contracts they inked overseas, respectively.
China’s direct investment in these countries totaled USD242 billion in 2021, making up 46 percent of its total outward foreign direct investment.
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