The Civil Engineering materials market has been a major beneficiary of China’s growth.
It accounts for about 10% of the country’s gross domestic product and has expanded more than 50 times in the past decade.
But while China’s domestic market has seen a massive boom, the country has also seen a surge in overseas investment.
The civil engineering industry is among the top three export markets for China, accounting for around 80% of total exports, according to a 2015 study by the Australian-based research firm IHS.
“It’s a market that has been growing since the mid-2000s and it’s been growing at a fairly rapid rate,” says Andrew Leung, the founder of Leung and Associates, which advises Chinese firms on international markets.
“So we think that it’s going to continue to grow.”
One of the biggest challenges for China’s civil engineering sector is the quality of materials used, so they are not used in everything, he says.
“If you go into a Chinese civil engineering project, it’s probably going to be a little bit more expensive than if you’re looking at something domestically.”
The country has built its civil engineering skillset through decades of education and training, but its demand has been fuelled by overseas demand.
This is partly why China has built an impressive number of infrastructure projects, with projects in the cities of Chongqing, Beijing, Shanghai and Tianjin, among others.
But the market is also becoming increasingly reliant on foreign partners.
In the past year, Chinese firms have invested more than $8bn in Australia, according the Australian Industry Group, and in 2017 the Australian government allocated $1.2bn in funding for civil engineering projects.
“I think the boom is very, very, temporary,” says Leung.
“And it’s very much dependent on China’s economic success.”
Chinese firms also invest in overseas infrastructure projects in Australia to secure cheap labour, according a recent report from the Australian Chambers of Commerce.
This has had a significant impact on the state of the industry in Australia.
According to the report, the Chinese sector accounted for just 0.6% of Australia’s construction projects in 2018, compared to 3.3% in the same year last year.
This decline has been particularly noticeable in Sydney, with just 10% more projects in Sydney in 2020 than in 2017.
“In 2020, Sydney was a major city in the world, but today it’s a major global city,” says Anthony O’Donovan, the head of the Australia Institute’s Infrastructure and Cities programme.
“This is a really, really big change.”
The city is also being left behind in terms of government investment.
In 2017, China invested $7.4bn in infrastructure in Australia and China’s share of the global investment was 4.7%.
By comparison, China’s GDP per capita is just over $10,000.
“The state has invested in infrastructure to the tune of $8.4 billion a year for the last 25 years,” O’Connor says.
“But that’s been going up every year.”
In 2020 it was $8 billion, but by 2022 it was about $18 billion.
And the gap between China’s and Australia’s infrastructure investments was growing, with China investing $10.6bn more in infrastructure projects than Australia.
The state is also getting more involved in the market, too.
“They have really stepped up in recent years and given more support to the domestic industry, particularly the civil engineering and civil engineering related projects,” says O’Donnell.
“They’ve been investing more than the private sector and more than other industries.”
O’Donovich says Australia has a long history of supporting the civil engineers in China.
“For a long time, they were being discriminated against, because they were not Chinese, and they had very poor wages.
So we’ve had some very strong support over the years, and now the government has made a very strong commitment to supporting civil engineers and civil engineers related projects in China.”
It’s not just the government’s money that’s helping the industry.
China has also taken some steps to help attract foreign investment.
Last year, the government established the China-Australia Strategic Investment Partnership, which involves Australia providing the Chinese government with the support for projects that have a “significant economic impact on Australia”.
“We’re also working with the Chinese side on the development of a high-speed rail line in Shanghai,” says Mr O’Keefe.
“We have also been working closely with the Japanese government on a railway line through the Himalayas.”
China’s investment in Australia also includes a large number of Chinese companies investing in the infrastructure projects that are underway in Sydney.
“Chinese companies have invested in Australia on a very regular basis,” says Kevin O’Brien, director of the Australian Centre for Infrastructure and Communities at the University of Sydney.
“Chinese companies invest in Australia a lot, they’ve been doing so for many years.”
Ongoing projects are also being done in Australia in partnership with China. For