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Supplying demand

China Opportunities

Across China there are signs of rampant construction activity. Andrew Mylius reports on a market where opportunities and challenges abound.

China hardly needed to win the 2008 Olympics bid to put it on the economic map. Its economy is growing at a staggering 7% - GDP was $1,168bn last year. Two of the country's biggest contractors, Beijing Urban Construction Group and Beijing Construction Engineering Company claim that construction activity is expanding even faster. China's principal cities are forested with tower cranes; they exude a palpable sense of change.

To put things in perspective, the UK's Chancellor of the Exchequer is predicting 2% to 2.5% growth this year and 3% next, and the construction industry is straining to keep abreast of workload. In 2001, China's construction market was worth in the region of $330bn.

Overseas firms won 15% - or $49.5bn - of that.

Currently the world's sixth largest economy, China is expected to overtake Germany and France within five years, going into competition for prime position with Japan and the US.

Following decades of economic isolation, the 1990s saw the Chinese government stripping away trade barriers, and China joined the World Trade Organisation in 2001.

Given the potential demand, combined with relatively low labour costs and high standards of education, multinational companies are increasingly attracted to set up industrial and manufacturing operations there. China is expected to double its volume of international trade by 2007-08.

The only thing that could hold the country back in its headlong rush to global primacy is the shortage of power, water, road, rail and port infrastructure that are so urgently needed.

At the same time China is urbanising rapidly. Just 20% of China's 1.4bn population lives in cities, but housing, public transport, power, water supply, sewage treatment and solid waste management are all under acute pressure.

With a land mass comparable to Western Europe, China presents a far from homogeneous picture. Arup director Grant Robertson describes Shanghai, the port city on China's southeastern seaboard as 'like Hong Kong was 20 years ago': that is, booming, optimistic, and full of opportunity. Capital Beijing, too, is a hive of construction activity.

These powerhouses have seen economic growth close to 15%, double that for the country as a whole.

China's increasing prosperity is concentrated in the east of the country, which benefits from the proximity of Hong Kong and from growth in maritime trading.

By contrast, western China with poor transport links to the rest of the country, remains predominantly agricultural and poor.

Much of China's economic expansion to date has been stimulated by government spending.

Now, to stem the huge and potentially destabilising migration eastward of recent years, the government is investing massively to boost economic activity in the west.

South west China's fortunes are closely tied to the controversial Three Gorges Dam on the River Yangtse. This colossal hydropower project will help satisfy the energy needs of new industries and cities across Sichuan province.

Car makers Ford and Fiat, and petrochemicals giant BP have set up plants in the region, spearheading a wider drive to develop high tech manufacturing and process industries. At the same time, burgeoning principal cities Chongqing and Chengdu are rapidly re-inventing themselves as power-hungry financial, IT, commercial and trading centres.

The Three Gorges Dam will also open up south western China to heavy shipping. Creation of a reservoir that will cover an area equivalent to that of Britain will increase water depth and slow the current enough to allow 10,000t vessels into the interior.

By cutting the time it takes to navigate from Yangtse port Chongqing to Shanghai at its mouth, and by increasing the volume of freight that can be transported up and down the river, the dam is expected to transform trade patterns in the region.

However, to realise the government's ambitions, not just for the south west but the nation as a whole, a colossal programme of additional work is planned.

Over the past five years, $4.7bn has been invested in ports. Total throughput, including bulk coal, iron ore, containerised freight and roro traffic, has grown at 30% a year.

For the ports sector as a whole, growth is expected to be an impressive 10% per annum, reaching 3bn tonnes by 2005.

And demand is particularly strong for additional container handling capacity.

Between 1990 and 2000 throughput at China's top 10 container ports grew from 1.243M TEU (containers are measured in 'twenty foot equivalent units') to 18.675M TEU - a 15fold increase. According to the Ministry of Communications Chinese ports handled in the region of 27M TEU in 2001.

Existing sea and river ports are under intense pressure to modernise and expand. In all, 135 new deep water berths will be built within the next five years and 45 berths upgraded. A 57 berth deep water container terminal is planned at Ningbo, close to Shanghai, that will eclipse the world's busiest port, Hong Kong, when fully developed. The first five berths are to be up and running by 2005.

Meanwhile, flooding of the Yangtse valley above the Three Gorges Dam will submerge all existing port facilities on the river and its tributaries.

To move freight to and from ports, in western China alone $84bn is earmarked for delivery of 42,000km of highway by 2012.

Across the country, from 19962000, 240,000km of highway was built and $122bn further investment in road building is planned up to 2005.

Even so, the country's road network is struggling to keep pace with 22% per annum growth in traffic. Half the water melons destined for consumption in Beijing never make it to market because the secondary roads are so bad.

China's Ministry of Communications, which oversees national roads planning, wants to realise eight major bridges in the coming decade. Among these, the crossing designed to connect Ningbo and Shanghai ports across Hangshou Bay will be 27km long, with construction costs estimated at $859M. Total investment in new bridges, the Ministry calculates, will be $4bn.

In the next five years the Ministry of Railways is planning to spend $12bn on new railway track, increasing the number of high speed lines and improving connections between provincial cities and regional capitals. The Ministry currently owns 66,000km of track.

And airports too are under intense pressure to expand - passenger volumes grew by 11% to 133M between 1999 and 2000 and cargo by 15% to 4Mt. Seventeen new airports have been built since 1996 and 33 upgraded.

The government plans to build a system of hub airports at Beijing, Shanghai and Guangzhou, with airports in the western regions, at Chengdu, Xian, Wuhan and Kunming.

The Chinese government's commitment to rapid modernisation can not be doubted: development in China is mapped out in a succession of five year plans.

But the Olympic Games have created a sense of additional urgency in China's construction sector.

The year 2008 is a looming completion date for many projects only loosely connected with the 29th Olympiad. China will be putting itself on display to the world and wants to stand with the best of previous host nations. Just six years and counting.

Stage direction

For 18 months fierce debate raged over whether designs for the sleek, UFO-like Grand National Theatre should be built at all. Many felt that the site, just a couple of hundred metres away from Mao Zedong's mausoleum in Tien An Men Square, Beijing, should be honoured with a building in classical Chinese style. At last president Jiang Zemin intervened personally to get construction of the controversial scheme started.

Now, six months into construction, the theatre site is a swarm of activity. Some 4,000 workers are currently active on foundation works and the scheme is fast approaching ground level. By the time fit-out begins, close to 5,000 workers will be employed.

The $352M project is setting several records for China.

At -32.6m, the foundations are the deepest in Beijing. Joint venture main contractor Beijing Urban Construction Group, Hong Kong Construction and Shanghai Construction Group have so far fixed 30,000t of rebar and placed 96,000m 3ofconcrete.

Concrete, which is brought in from three batching plants 20km away on the outskirts of Beijing, will also be used for construction of the three main performance spaces - the opera stage, concert hall and theatre - as well as public and backstage spaces. The whole will be enveloped in a smooth titanium shell, supported on a steel superstructure. In total, nearly 225,000t steel and 200,000m 3concrete will be used.

Designed by French architect Paul Andreu and his atelier Aeroports de Paris, the Grand National Theatre challenges Chinese contractors to erect the largest single span steel roof in the country.

Longitudinally, it will arc over 216m without intermediate support. Laterally, the roof will cover 146m. Beijing Architectural Design & Research Unit is still working on construction details for the steel superstructure, which will be fabricated by a Shanghai shipyard, with modules joined on site, says general manager for the project Xu Jianyun.

Setting another first for China, the Theatre's 35,000m 2surface will be clad in a titanium skin - somewhere between 3,000 and 8,000 individually shaped panels. Xu says work is on schedule for completion at the end of 2004.

Beijing's booming construction sector is suffering from an acute shortage of labour. Young people are not joining the industry and half of all site workers are from other parts of China. Somewhere between 2M and 3M workers migrate seasonally between agricultural and building work.

Bidding for Beijing

Beijing wants to have much of the Olympic construction work finished within four years. A multi-billion dollar project list is about to go out to tender.

Olympic competition is fierce and the games have not even started.

A stream of foreign companies is flowing through the doors of the Beijing Organising Committee for the Olympic Games 2008 (BOCOG), which is preparing to invite design tenders in August and wants to award contracts by the end of the year. And Beijing's main design institutes and contractors are deep in discussions about how they might work with international firms who can enhance their performance. Construction is scheduled to start in July 2003, to be ready for trials by mid 2006.

Yet many key decisions have not yet been taken. There is everything to play for.

Beijing needs 15 new venues, including an 80,000 capacity National Stadium, an 18,000 seat swimming centre and an 18,000 seat indoor stadium, a 25,000 capacity baseball field at Wukesong, the Shunyi Aquatic Park, 36km north of Beijing, the 25,000 seat Laoshan Velodrome 25km outside Beijing, a national hockey stadium, an archery field, an exhibition centre for everything from badminton to wrestling, and tennis and swimming centres.

Extensive refurbishment and expansion will be carried out at 17 existing venues.

Outside Beijing a marina is to be built 690km away at Qingdao for the Olympic sailing events. Football stadia will be built at Tianjin, Shenyang, Shanghai and Qinhuangdao.

Close to $16bn has been earmarked for delivery of sporting infrastructure, with a further $12bn set aside for environmental improvement works.

An environmental impact assessment schematic design has already been carried out for the principal Olympic site, which will be built on 1,215ha area of parkland in one of Beijing's prime development areas. However, detailed master planning of the site and all new venues is up for grabs.

There is also a huge amount of associated infrastructure work planned. Some projects, including extensions to Beijing Metro, are already in train. But the municipal authority, which with BOCOG is organising Olympic-related projects, is setting out to upgrade roads, bus services, to provide additional hotel accommodation, increase water and power supply, upgrade air quality, and improve sewerage and solid waste management.

Works outlined include lconstruction of thermal energy plants lreconstruction of coal burning boilers, which supply hot water in the urban area lswitching the city's taxis and buses to run on liquid petroleum gas lincreasing sewage treatment rates to 90% by building six new plants lrecycling of 50% waste water lconstruction of new parks lestablishing a transport network using Beijing's planned 100km of metro as the 'spine' with bus routes radiating off it.

There are also plans to develop commercial space alongside the sports venues so that, post 2008, the areas developed will evolve easily into economically and socially productive urban centres.

Though the municipal government has funds to get preparations for the Games rolling, BOCOG is keen to attract private finance.

It is a similar story in tourist resort and port city Qingdao, which sees the Olympic sailing events as a spur to delivery of an impressive list of urban improvement projects.

Major schemes include design and construction of a 5.3km long bridge across the mouth of Qingdao Bay which is wanted to revitalise the city's poor western districts, a metro system connecting the city centre with the airport, two power plants, improved water supply and sewage treatment, and large scale rehousing.

A new 39km road linking south east and north west Qingdao has been approved and will be put out to international tender in July.

And two container berths that currently occupy the site designated for the Olympic marina will be relocated.

Following the boom in private home and car ownership, it is expected leisure sailing will take off among China's burgeoning middle class in the coming decade. The marina will be equipped to take a sizeable flotilla, and will also accommodate the cruise liners that are increasingly common along this picturesque stretch of coast.

The city is hoping to realise many of the schemes using build, operate, transfer or wholly owned foreign investment. As an enticement to overseas firms, 'we can provide land and associated infrastructure', says vice director of Qingdao Olympic Construction Project Office Wang Dong Chu.

INFOPLUS www. china. org. cn www. chinaddaily. com www. beijing-2008. org www. tdctrade. com/olympics www. beijing-olympic. org

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