SOEs shine as demand for better infrastructure on rise

Report underlines advantages of State players in building solutions, biz model

The surging demand for better infrastructure nationwide and in global markets — especially those involved in the Belt and Road Initiative — is expected to draw increasing participation from State-owned enterprises engaged in the sector, as such demand is providing valuable opportunities to sharpen their business edge and expand operating scale, a recent report said.

According to a report on Tuesday by China Securities Co Ltd, there is robust demand for infrastructure around the world, and the annual global total of infrastructure investment is expected to surpass $3 trillion by 2025. With diplomatic advantages earned by China through its efforts in pushing global cooperation, such as the BRI, and the nation's edge in infrastructure building, State contractors stand out among their global peers also for their professional solutions and maturer operating models.

In China, where infrastructure investment has been a key pillar stabilizing economic growth, especially during the COVID-ravaged years, the country's fast recovery still relies heavily on efforts to expand domestic demand, in which infrastructure investment plays a significant role, the report said.

Infrastructure investment will still be a focus of macroeconomic policies this year. The annual growth of the sector is expected to reach a relatively high level of around 10 percent this year, with most spending seen in projects concerning urban construction, transportation and infrastructure supporting clean energy use, the report said.

"Based on last year's issuing pace of special local bonds and regarding the significant role infrastructure plays in stabilizing the economy, issuance of the bonds is likely to speed up in the second quarter this year," said Wen Bin, chief researcher at China Minsheng Bank.

"In addition, with COVID-19 impacts easing, fiscal spending on pandemic controls will fall while that on infrastructure will rise. With various financing tools taking effect, infrastructure construction will further accelerate this year driven by ample fund resources, and more new projects are expected to commence," Wen said.

Citing the purchasing managers' index concerning construction in April, which was 63.9 — much higher than the 50-point mark that separates contraction from growth — the report said that with various favorable conditions, State contractors which have generally shown clear improvements in their earning strength will reap more benefits in domestic and global markets amid their future expansion.

China Railway 24th Bureau Group Corp Ltd, a unit of the centrally administered China Railway Construction Corp, told China Daily that its construction is heading faster toward early operations on some domestic projects.

One of the builders engaging in the urban rail project in Hefei, Anhui province, CR24 said its workers dug through a two-way tunnel on a section under construction on Hefei Metro's Line 6 over the weekend.

Located in the section between Science Avenue and Huaining Road, the underground tunnel went through many high-risk areas in the provincial capital, such as under office buildings, expressways and a railway station. Construction workers paid extra attention as tunneling work runs the risk of leading to the settlement of nearby buildings and foundations, CR24 said.

In addition, the State contractor said its team working on the Wenling-Yuhuan High-speed Railway project in Taizhou, Zhejiang province, is also making faster progress than expected, thanks to recovering industrial and logistics chains nationwide.

One of the SOEs participating in the building of the high-speed rail line, CR24 said that with the supply of construction workers being adequate thanks to the optimization of the COVID-19 control measures, the team managed to gain back its pace on the project of which 84.8 percent of works are bridge and tunnel construction.

The railway is a local railway project to facilitate integrated regional development, CR24 said, with the newly planned section reaching 37.8 kilometers.

Globally, in Sri Lanka's Dambulla, the first section of a 17-km canal project undertaken by China State Construction Engineering Corp (CSCEC) Sri Lanka Branch started operating near the village of Nabadagahawatta in late April, with the water carried from the nearby Wemedilla Reservoir.

The canal section, which is 1.5 meters high, irrigates the farmlands it passes through before reaching the destination, putting an end to the long-felt difficulties faced by local farmers.

CSCEC said its workers are responsible for the construction work of two tunnels, four siphons, an open water canal, an underground water canal, bridges, culverts, roads and landscaping along the canal line.

"The construction is progressing smoothly thanks to team efforts, which comprises both Chinese and local employees. The main structure of the entire canal is expected to be completed before the end of this year," said Tao Yanrong, the project manager.

CSCEC, ninth on the Fortune Global 500 list, reported in April a 10.6 percent surge in its new contract value last year. Its revenue surpassed 2 trillion yuan ($288.7 billion) for the first time in 2022, a year-on-year increase of 8.6 percent.