Infrastructure expansion in China opens windows for global investment

Infrastructure investment has been and will keep being one of the main priorities for the Chinese government, which has acknowledged for some time that a modern economy works with highways, trustworthy connective routes, electricity and telecommunications., Searching to become the economy that moves more resources to “build bridges”, this country has been funding millions of US Dollars for over 25 years to this sector. With this vision, local and international investment opportunities have flourished. Is your business ready to benefit from this expansion?

From the end of the 90s until now, more than 100 million Chinese have benefited from the renewals the government has enabled in the energy and telecommunications sectors. Between 2001 and 2004, the investment in rural roads grew 51% annually, and with several measures, China has achieved to surpass the United States and the European Union in terms of infrastructure investment volume.

According to the chinese infrastructure study: The Big Picture, held by the consulting firm McKinsey, measured by the resources China destined to infrastructure between 1992 and 2011, it’s the country with the top investment volume as a percentage of its Gross Domestic Product (GDP). While China invested 8.5% of its GDP, Japan assigned 4.7% and United States and The European Union only spent the equivalent to 2.6% of their respective GDP. With the level of resources assigned, China reports an infrastructure inventory superior to the global average with an equivalent value of 76% of its GDP.

But it is not just about what has been invested in the latest years, the consulting firm projects that by 2020 China will extend its speed train railways in 157%, their container capability in their seaports in 132% and the number of airports across their territory in 62%. With this volume, experts at McKinsey declare that the country could maintain its global leadership in this type of investment and, even if they reduced the invested resources to 6.4% of their GDP, they would be in a privileged position for their whole inventory.

Just in 2017 –The Economist Intelligence Unit specifies – 30% of the total investment of the country was assigned to build roads, bridges and communication routes. According to valuations from this same global analytic firm, this contributed to 0.7 percentual points of the GDP growth in that year. In fact, it was estimated to have been one of the main reasons for the economic recovery of the country.

Nevertheless, the firm adds, “the data suggests that there is still space to keep investing in infrastructure”. The inventory on this item per capita is still way under what has been registered in the United States and in Japan – a valid comparison, considering their territories are similar”.

Also, the analyst explained, considering that China occupies position number 47 in the ranking for Infrastructure Quality of the Global Economic Forum, there is still room not just to grow, but to improve what is already in place.

This opens space for local and foreign investment. If your company is looking for new expansion spaces, China may be the ideal destination. In order to do this, it is better to be supported by an expert partner in this territory such as HSBC.