Strategy Management Consultancy. China. Regional Analysis. k n o w l e d g e c e n t e r linesight.com/knowledge

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1 Strategy Management Consultancy China Regional Analysis k n o w l e d g e c e n t e r 2017 linesight.com/knowledge

2 Contents China Market Review 3 Macro indicars 4 Trend in Chinese construction output by secr 4 Construction spending growth 4 GDP growth rate 5 Currency exchange rates 5 Linesight average Chinese construction costs Main contracrs and design firms 7 Top 15 contracrs 7 Top 15 design firms 7 Contriburs: John Butler, Michael Murphy Linesight China

3 China Market Review By 2030, China is expected represent almost a quarter of all construction activity worldwide A growth slowdown persists in China, as the world s second-largest economy transitions an export-driven a consumption-driven model. China s economy in 2016 experienced minimal growth during a relatively stagnant nine months, only pick up in Q4, with the economy expanding by 6.8 percent. For the full year, GDP grew by 6.7 percent the slowest growth in 26 years, but within the government s target range of percent. Analysts are attributing China s economic growth in 2016 strong fiscal support, loose monetary policy and a robust property market in the first three quarters of the year. Chinese banks extended a record US$1.8 trillion of loans throughout the year, as the government used more credit-fuelled stimuli meet its growth target, even at the risk of exacerbating debt levels in the economy. While the strong property market supported GDP growth of 6.7 percent during 2016, fears of overheating in the property secr led at least 21 cities introduce purchase restrictions and ughen mortgage lending. These measures are intended on dampening speculation without triggering a destabilizing reversal. The encouraging indications demonstrated wards the latter part of the year are expected remain in 2017, as the fiscal stimulus and start of the 13th Five Year Plan revitalize the industry following a weak According some experts, China has passed the peak in terms of construction activity (deemed be 2013), and yet, it remains the world s largest construction market. By 2030, China, the US and India will account for 57 percent of all global growth in construction and engineering, at a value of over US$4.5 trillion. China is expected contribute US$2.1 trillion of this and represent almost a quarter of all construction activity worldwide slightly higher than present levels. 3 China

4 Macro indicars Trend in Chinese construction output by secr 12% 10% 8% 6% 4% 2% 0% Residential Non residential Infrastructure Total Source: Global Construction Perspectives and Oxford Economics Construction spending growth (% pa) Pakistan 4.3% India 8.9% China 7.6% Bangladesh 6.1% Thailand 3.4% Malaysia 4.5% Hong Kong 2.5 % Vietnam 6.7% Indonesia Singapore 3.5% 4.5% Korea 2.2% Taiwan 3.2% 2.6% Japan 7.6% Philippines Source: IHS Global Insight 4 China

5 GDP growth rate Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: Trading Economics. National Bureau of Statistics China Currency exchange rates Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct CNY/EUR CNY/USD$ Source: European Central Bank 5 China

6 Linesight average Chinese construction costs 2017 Outlined below are the indicative construction costs for the varying secrs based on tenders received in the regions. Shanghai Beijing Hong Kong Chengdu Guangzhou Description Residential Secr Medium Quality - High Rise (Developer Standard) ,900 3, , High Quality - High Rise (Developer Standard) 1,650 1,900 1,700 1,950 3,950 4,950 1,050 1, ,300 Commercial / Office Secr Medium Quality - High Rise (Shell and Core) 950 1, ,450 3,000 3, , ,300 Medium Quality - High Rise (Developer Standard) 1,250 1,650 1,300 1,900 3,850 4,750 1,050 1,450 1,100 1,550 Hotel and Leisure / Retail Secr Shopping Centre 1,350 1,850 1,300 1,900 3,750 4,650 1,150 1,600 1,150 1,600 Budget / 3* Hotel 1,000 1,400 1,050 1,450 3,650 4,200 1,000 1,300 1,025 1,350 4 / 5* Hotel 2,400 2,900 2,400 3,000 4,250 5,300 2,300 2,650 2,350 2,700 Education Primary Level (up 3 sries, no Air Conditioning) ,500 2, Car Park Multi Srey ,400 1, Double Level Basement 775 1, ,200 2, Source: Linesight 6 China

7 Main contracrs and design firms Top 15 contracrs 2016 Rank Construction company Revenue $ bn 1 CHINA STATE CONSTRUCTION ENGINEERING CORP CHINA RAILWAY GROUP LTD CHINA RAILWAY CONSTRUCTION CORP CHINA COMMUNICATIONS CONSTRUCTION GROUP POWER CONSTRUCTION CORP. OF CHINA CHINA METALLURGICAL GROUP CORP SHANGHAI CONSTRUCTION GROUP ZHEJIANG CONSTRUCTION INVESTMENT GROUP CO CHINA GEZHOUBA GROUP CO. LTD CHINA NATIONAL CHEMICAL ENG'G GROUP CORP BEIJING URBAN CONSTRUCTION GROUP CO JIANGSU ZHONGNAN CONSTR. IND. GROUP CO ANHUI CONSTRUCTION ENGINEERING GROUP CO QINGJIAN GROUP CO CHINA YUNNAN CONSTRUCTION ENG G GROUP CO Note: 2016 ranking is based on 2015 contracting revenue Source: Engineering News-Record Top 15 design firms 2016 Rank Construction company Revenue $ bn 1 POWER CONSTRTUCTION CORP.OF CHINA CHINA COMMUNICATIONS CONSTRUCTION GROUP CHINA RAILWAY CONSTRUCTION CORP CHINA RAILWAY GROUP LTD CHINA POWER ENGINEERING CONSULTING GROUP CO CHINA CONSTRUCTION ENGINEERING DESIGN GROUP CORP SINOPEC ENGINEERING (GROUP) CO CHINA METALLURGICAL GROUP CORP CHINA NATIONAL MACHINERY INDUSTRY CORP ARCPLUS GROUP TONGJI ARCHITECTURAL DESIGN (GROUP) CO FIRST SURVEY & DESIGN INSTITUTE OF RAILWAY JSTI GROUP CHINA PETROLEUM PIPELINE ENGINEERING CORP CCDI GROUP 0.29 Note: 2016 ranking is based on revenue for design services performed in 2015 Source: Engineering News-Record 7 China

8 China 22nd Floor, Office Tower 3 Raffles City Changning, No Changning Road, Changning District Shanghai P.R.C T: Helen Jie Shao helen.jieshao@linesight.com