Overall industry situation: slowing growth, structural adjustment

The Chinese construction industry is currently undergoing a period of profound adjustment and transformation, facing multiple challenges such as changes in demand structure, technological innovation, and the transition to green and low-carbon development. However, this period also presents new opportunities. The following analysis examines the industry's overall trends, policy drivers, sub-sectors, regional dynamics, challenges, and opportunities:

I. Overall Industry Trends: Slowing Growth and Structural Adjustment

1. Market Size and Growth

In 2024, the total output value of China's construction industry reached 32.65 trillion yuan, representing a year-on-year increase of 4.4%, but the growth rate decreased by 1.4 percentage points compared to the previous year. New contract value decreased by 4.74% year-on-year, marking seven consecutive quarters of decline, indicating weak industry growth. Leading companies such as China Construction achieved a new contract value of 4.5 trillion yuan in 2024, up 4.1% year-on-year, but the proportion of real estate business remained high (contract sales of 421.9 billion yuan), indicating continued reliance on traditional business.

2. Significant Regional Disparities

Guangdong Province, as an economic powerhouse, saw a year-on-year decline of 2.4% in total construction output in the first quarter of 2025. The decline in the Pearl River Delta region (2.6%) was higher than that in the eastern, western, and northern parts of Guangdong (1.0%). The eastern, western, and northern regions of Guangdong, where Yunfu and Xingxing are located, were supported by infrastructure projects, resulting in a relatively smaller decline, but the overall region still faces downward pressure.

II. Policy-Driven: Green Transition and Smart Construction

1. Comprehensive Promotion of Green Buildings

The State Council has explicitly required that all new urban buildings fully comply with green building standards by 2025, with new ultra-low energy consumption buildings increasing by 0.2 billion square meters compared to 2023, and energy-saving renovations of existing buildings increasing by 2 billion square meters. Guangdong Province has further proposed that by 2025, the photovoltaic coverage rate of new public institution buildings and factory roofs should aim to reach 50%, with electricity consumption accounting for over 55% of building energy use. This has driven the application of green building materials (such as aerated concrete bricks) and photovoltaic integration technology, with companies like Dongfang Yuhong enhancing their competitiveness through green certification.

2. Accelerated Implementation of Smart Construction

BIM technology, prefabricated buildings, and smart construction sites have become key areas of transformation. The target share of prefabricated buildings by 2025 is 30%, driving the number of component manufacturing companies to 2,493. Guangdong Province is promoting industrialization through policy incentives, such as Guangxi's 87.92% share of construction engineering output in 2023. Leading companies like China Construction are increasing their investment in overseas smart construction projects, with new contract signings in January 2025 growing by 347% year-on-year.

III. Sub-sectors: Traditional Contraction and Emerging Growth

1. Weak Demand in Traditional Sectors

Residential real estate demand continues to decline due to slowing urbanization and demographic changes. In 2024, the output value of the housing construction industry decreased by 0.4% year-on-year, while that of the civil engineering construction industry decreased by 4.4%. Infrastructure investment growth has slowed, with large-scale projects such as railways and highways nearing saturation, shifting toward new infrastructure (e.g., smart cities and renewable energy facilities).

2. Growth Potential in Emerging Sectors

- Urban Renewal: The country has entered a phase of stock renewal, with projects such as the renovation of old residential areas and the repair of municipal facilities becoming new growth points. Guangdong is promoting organic urban renewal through its “preserve, renovate, and demolish” policy, strictly controlling large-scale demolition and construction.

- International Market: “Belt and Road” projects are driving growth in overseas orders. China Construction's new contract value for overseas projects in 2024 reached 221.3 billion yuan, up 19% year-on-year. Overseas projects like the Algeria railway project demonstrate Chinese companies' competitiveness in the international infrastructure market.

- Green and Smart Buildings: The smart building market is expected to grow at a compound annual growth rate of 12%, with key applications in commercial complexes and smart parks. The penetration rate of green building materials exceeds 50%, and energy-efficient construction equipment and digital management platforms are becoming widespread.

IV. Challenges and Responses: Costs, Talent, and Risks

1. Cost Pressure and Market Competition

- Raw Material Fluctuations: Steel prices have plummeted (e.g., rebar in Guangxi dropped to 3,130 yuan per ton) while cement prices have risen (P.042.5 bagged cement at 385 yuan per ton). Sand and gravel prices have surged by 8% due to environmental restrictions on mining, making cost control more challenging for companies.

- Low-price competition: Profits for small and medium-sized enterprises have been squeezed to less than 5%, while industry concentration has increased, with the eight major state-owned construction companies accounting for an increasingly larger share of new contract values.

2. Labor Shortages and Skill Gaps

The industry faces both a “labor shortage” and “structural unemployment.” While there is an oversupply of general laborers, there is a 40% shortage of skilled workers in the fields of prefabricated construction and smart construction. Guangdong Province is addressing this through industrial worker training (such as the Shenzhen Entry-Level Vocational Training Certification) and school-enterprise collaborations to enhance skills. However, salary growth in the architectural design industry is projected to be only 0.7% by 2025, indicating insufficient talent attraction.

3. Financial and Credit Risks

The financial condition of construction companies remains poor overall, with an average financial capability score of just 45 points (out of 100) in 2023.