China’s Builders Are Hurting: Beijing May Feel The Pain

www.oann.com | 12/19/2018 | Staff
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NANTONG, China (Reuters) – Cai Zhonghui has worked in China’s construction industry all his adult life, graduating from a laborer to owning a company with 100 workers building factories and roads around eastern China.

Cai says the industry is now facing the toughest challenges he has seen, squeezed by high materials costs, tougher regulations and tighter access to credit, making him cautious about taking on new projects.

Caution - Threat - Beijing - Economy - Infrastructure

That caution reflects a broader threat to Beijing as it looks to stimulate a slowing economy with increased infrastructure approvals: private builders – the backbone of the sector – are less willing to take projects on due to higher risks and lower profits.

“In the past, once there was an opportunity, we would rush to grab the work. But now we’re more choosy: Are we able to undertake it? Do we really want to do this? We want to lower our risks,” Cai, a wiry and sprightly 63-year-old, told Reuters at his office in the eastern Chinese city of Nantong.

Construction - Projects - Regulations - Work - Suspensions

Construction projects have taken longer to start and complete, due to increased environmental regulations, work suspensions and growing liquidity pressures, Cai and other industry executives told Reuters.

The builders’ concerns come at a time when China’s broader infrastructure and property industry, a key driver of its economy, is in flux.

Investment - Proportion - China - Economy - Services

While investment as a proportion of China’s economy has been trending down as services and consumption rise, it still contributed to about one-third of the country’s economic growth last year.

China poured billions of dollars into building roads, rail-lines and other infrastructure to prop up the economy during the global financial crisis in 2008 and has routinely returned to use it as a driver of growth. However, analysts say that its effectiveness has been increasingly dulled with rising debt risks and inefficient projects.

Beijing - Approvals - Infrastructure - Projects

Beijing began tightening approvals for infrastructure projects last...
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