China finds new regions to bolster project contracting

The Latin America and Caribbean markets are becoming the focus for many Chinese project contractors, and Central and Eastern Europe will pave the way to European markets, a senior official said Friday.

"The LAC region has developed into a new hot spot for China's project contracting business in recent years. Large-scale projects are in their infancy, and the potential is great," Diao Chunhe, chairman of the China International Contractors Association, said at a press briefing

Diao disclosed that Chinese companies' value of newly signed contracts in the LAC region surged 25 percent year-on-year in 2013. Meanwhile, some major projects are under discussion, including railway projects in Brazil worth more than $10 billion and power station projects in Argentina.

"The Central and Eastern European market will be a breakthrough for Chinese enterprises to enter the European market. The CEE region has huge demand for infrastructure construction," Diao said.

He added that the value of Chinese companies’ newly signed contracts in the CEE region, especially in transportation and petrochemicals, rose significantly last year with a growth pace topping the European market.

"But the CEE market also has challenges, including slow economic recovery and sluggish consumption," he said.

Diao made the remarks at a news conference at the 5th International Infrastructure Investment and Construction Forum. The forum will be held on May 8-9 in Macao.

Five panels will cover offshore project finance, cross-border acquisition strategies, prospects in the LAC and CEE regions, as well as a dialogue between foreign ministers and Chinese entrepreneurs, according to a release from the association.

China's project contractors maintained robust growth in recent years. In 2013, companies achieved an accumulated realized turnover on project contracting of $137.14 billion, up 17.6 percent from a year earlier, and the value of newly signed contracts was $171.63 billion, up 9.6 percent year-on-year, according to the Ministry of Commerce.

The Asian and African markets account for the lion's share of China's overseas project contracting business.

In 2013, the Asian market reversed a decline of two straight years and made up about half of China’s realized turnover on project contracting, while the African market made up about one-third of the total, Diao said.

"The prospect of the global project contracting business is very optimistic. Developed economies are rebuilding their infrastructure, while developing economies will maintain robust demand for improving infrastructure. Interconnectivity will be the focus of infrastructure construction," he said.

"Meanwhile, offshore financing will be diversified as joint finance from governments, enterprises and institutions will enhance the success opportunities of projects," Diao said.

He added that global project contracting will develop in an unbalanced way, with a robust pace in the Asian Pacific market, improvement in European and North American markets, and high return with high risks in the Middle East market.

China's initiative of infrastructure interconnectivity since last year will be a very important force in encouraging Chinese companies to go global.