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Looking East: China’s Experience Opens New Opportunities for Steel Construction
March 4, 2024
Amid economic sanctions, it is important to make the fullest possible use of the capabilities of Russian steel producers, which are facing certain difficulties in exporting their products and are seeking to increase supplies to domestic construction projects.
Against this background, China’s steel construction industry — and particularly the role of the state in expanding the production and use of steel structures — is of considerable interest.
Konstantin Matveenkov, Director of Sustainable Development at Eurasia Development, a Russia-China corporate group specializing in technology transfer between Russia and China, addressed this topic during a webinar held the previous week by the Association for Steel Construction Development (ARSS) entitled “China’s Experience in Developing the Steel Construction Market.”
During the webinar, he provided a detailed overview of how China regulates and supports its steel structures market.
Against this background, China’s steel construction industry — and particularly the role of the state in expanding the production and use of steel structures — is of considerable interest.
Konstantin Matveenkov, Director of Sustainable Development at Eurasia Development, a Russia-China corporate group specializing in technology transfer between Russia and China, addressed this topic during a webinar held the previous week by the Association for Steel Construction Development (ARSS) entitled “China’s Experience in Developing the Steel Construction Market.”
During the webinar, he provided a detailed overview of how China regulates and supports its steel structures market.
His Majesty the Market
According to Konstantin Matveenkov, China produces more than 1 billion tonnes of steel annually, accounting for over half of global steel output. Around 100 million tonnes are used each year to manufacture steel structures.
Nevertheless, reinforced concrete remains the preferred construction material in China, as its technology is well established and comparatively inexpensive.
Although China’s steel structures market is still at an early stage of development, it is expanding rapidly. Over the past several years, the share of construction based on steel structures has increased fourfold and continues to grow.
Steel-frame buildings currently account for around 10% of all newly commissioned construction projects in China. This remains relatively low compared with the United States, Japan and South Korea, where the figure stands at approximately 20–40%, but China plans to increase its share to 15% by 2025.
The rapid growth in steel structure production and application can largely be explained by structural changes in the market similar to those seen in other developed economies.
In the United States, for example, the three largest steel structure manufacturers account for 80–90% of the market. China’s market remains highly fragmented: it includes a large number of small and medium-sized enterprises, while the five leading companies account for only around 6–7%.
Among state-owned companies, China State Construction Engineering Corporation stands out. Among private players, Honglu Steel Structure is the market leader, producing almost 5 million tonnes of steel structures annually.
Two other private companies — Hangxiao Steel Structure and Jinggong Steel Building Group — each produce more than 1 million tonnes of steel structures per year.
At the same time, large steel structure manufacturers are gradually acquiring smaller and medium-sized companies, contributing to changes in the broader steel construction market.
This trend has become particularly visible among private companies in recent years. Many are seeking to transform their business model by moving beyond the simple production of steel structures toward general contracting, allowing them both to supply their own structures and construct buildings using them.
Another potential source of growth is the wider use of steel structures in residential construction.
As in Russia, steel structures in China are used primarily for industrial facilities and public buildings, such as schools and hospitals, while their share in residential construction remains relatively limited and is concentrated mainly in high-rise buildings.
Government-Led Development
Government policy also plays a major role in accelerating the development of steel construction in China.
Government interest in the sector emerged in the early 2000s amid rising labor costs, increasing demand for energy efficiency and stricter environmental protection requirements.
In 2013, the development of prefabricated construction was included for the first time as a policy target under the 12th Five-Year Plan. Since then, an increasing number of national-level policies have been introduced to regulate and stimulate the development of steel construction.
For example, in 2017 China adopted a development plan for prefabricated construction covering steel structures, reinforced concrete and timber.
To establish a market for these construction methods, approximately 500 demonstration projects were implemented across 50 pilot cities under the plan.
'
A distinctive feature of China’s steel construction policy is that support is provided not only at the national level but also by provincial and municipal governments.
This reflects China’s governance system, under which national initiatives are subsequently discussed and implemented at lower administrative levels, sometimes resulting in measures that are even more ambitious than those adopted by the central government.
Konstantin Matveenkov highlighted the particularly active role of Chinese provinces, which adopted 443 policy documents supporting steel construction between 2010 and 2020.
These measures were aimed at establishing a regulatory environment for steel construction companies, supporting their development and stimulating demand.
Steel construction receives particularly strong support in provinces and municipalities located in earthquake-prone areas, such as Shandong and Chongqing, as steel-frame buildings offer greater seismic resistance.
These support measures led Matveenkov to conclude that although China is also still exploring how best to increase steel construction volumes, it has progressed somewhat further than Russia in developing a comprehensive system of government support and could therefore provide useful lessons.
Among his recommendations for developing steel construction in Russia based on China’s experience, the first is to ensure the widest possible range and diversity of support measures, simultaneously covering the regulatory environment, the production and supply chain, and demand for buildings constructed using steel structures.
Economic, infrastructure, information and other policy instruments should all be used.
The second recommendation is to involve a broad range of government bodies and specialized agencies in developing support measures. This would help avoid situations in which organizations possessing relevant public resources are excluded from the industry’s regulatory framework.
It is equally important to involve and incentivize regional governments.
China’s experience demonstrates that the initiative of local authorities has played a major role in creating regional leaders in steel construction.
Economic and financial support measures should also be introduced more rapidly.
The use of subsidies, preferential lending, construction incentives and other instruments has allowed China to reduce the cost of transitioning from cheaper traditional reinforced-concrete construction to steel construction and has made steel structures more attractive to developers and investors.
Preferential mortgages for buyers of homes constructed using steel structures also play an important role in stimulating domestic demand in China.
When promoting steel construction among businesses and consumers, Russia could also follow China’s example by linking its advantages with green technologies, simplifying access to green financing, and developing certification for developers and steel structure manufacturers.
According to Matveenkov, greater attention should also be paid to research and development and technical support for steel construction.
He noted that the Chinese government stimulates technological progress in this area through various measures, including tax incentives and the establishment of research institutes.
It also facilitates access to research results through standards, unified rules, technical reference materials and databases.
The development of specialized university programs and professional training courses for engineers and managers is equally important.
Finally, based on China’s experience, the expert recommends introducing requirements that make steel construction mandatory or prioritized in selected sectors and geographic areas.
China’s emphasis on steel construction in rural and earthquake-prone areas helped create a guaranteed initial market for developers operating in these regions.
Original article published by Stroitelnaya Gazeta:
https://stroygaz.ru/publication/materials/kurs-na-vostok-blagodarya-kitayskomu-opytu-otkryvayutsya-novye-vozmozhnosti-primeneniya-stali-v-stro/
According to Konstantin Matveenkov, China produces more than 1 billion tonnes of steel annually, accounting for over half of global steel output. Around 100 million tonnes are used each year to manufacture steel structures.
Nevertheless, reinforced concrete remains the preferred construction material in China, as its technology is well established and comparatively inexpensive.
Although China’s steel structures market is still at an early stage of development, it is expanding rapidly. Over the past several years, the share of construction based on steel structures has increased fourfold and continues to grow.
Steel-frame buildings currently account for around 10% of all newly commissioned construction projects in China. This remains relatively low compared with the United States, Japan and South Korea, where the figure stands at approximately 20–40%, but China plans to increase its share to 15% by 2025.
The rapid growth in steel structure production and application can largely be explained by structural changes in the market similar to those seen in other developed economies.
In the United States, for example, the three largest steel structure manufacturers account for 80–90% of the market. China’s market remains highly fragmented: it includes a large number of small and medium-sized enterprises, while the five leading companies account for only around 6–7%.
Among state-owned companies, China State Construction Engineering Corporation stands out. Among private players, Honglu Steel Structure is the market leader, producing almost 5 million tonnes of steel structures annually.
Two other private companies — Hangxiao Steel Structure and Jinggong Steel Building Group — each produce more than 1 million tonnes of steel structures per year.
At the same time, large steel structure manufacturers are gradually acquiring smaller and medium-sized companies, contributing to changes in the broader steel construction market.
This trend has become particularly visible among private companies in recent years. Many are seeking to transform their business model by moving beyond the simple production of steel structures toward general contracting, allowing them both to supply their own structures and construct buildings using them.
Another potential source of growth is the wider use of steel structures in residential construction.
As in Russia, steel structures in China are used primarily for industrial facilities and public buildings, such as schools and hospitals, while their share in residential construction remains relatively limited and is concentrated mainly in high-rise buildings.
Government-Led Development
Government policy also plays a major role in accelerating the development of steel construction in China.
Government interest in the sector emerged in the early 2000s amid rising labor costs, increasing demand for energy efficiency and stricter environmental protection requirements.
In 2013, the development of prefabricated construction was included for the first time as a policy target under the 12th Five-Year Plan. Since then, an increasing number of national-level policies have been introduced to regulate and stimulate the development of steel construction.
For example, in 2017 China adopted a development plan for prefabricated construction covering steel structures, reinforced concrete and timber.
To establish a market for these construction methods, approximately 500 demonstration projects were implemented across 50 pilot cities under the plan.
'
A distinctive feature of China’s steel construction policy is that support is provided not only at the national level but also by provincial and municipal governments.
This reflects China’s governance system, under which national initiatives are subsequently discussed and implemented at lower administrative levels, sometimes resulting in measures that are even more ambitious than those adopted by the central government.
Konstantin Matveenkov highlighted the particularly active role of Chinese provinces, which adopted 443 policy documents supporting steel construction between 2010 and 2020.
These measures were aimed at establishing a regulatory environment for steel construction companies, supporting their development and stimulating demand.
Steel construction receives particularly strong support in provinces and municipalities located in earthquake-prone areas, such as Shandong and Chongqing, as steel-frame buildings offer greater seismic resistance.
These support measures led Matveenkov to conclude that although China is also still exploring how best to increase steel construction volumes, it has progressed somewhat further than Russia in developing a comprehensive system of government support and could therefore provide useful lessons.
Among his recommendations for developing steel construction in Russia based on China’s experience, the first is to ensure the widest possible range and diversity of support measures, simultaneously covering the regulatory environment, the production and supply chain, and demand for buildings constructed using steel structures.
Economic, infrastructure, information and other policy instruments should all be used.
The second recommendation is to involve a broad range of government bodies and specialized agencies in developing support measures. This would help avoid situations in which organizations possessing relevant public resources are excluded from the industry’s regulatory framework.
It is equally important to involve and incentivize regional governments.
China’s experience demonstrates that the initiative of local authorities has played a major role in creating regional leaders in steel construction.
Economic and financial support measures should also be introduced more rapidly.
The use of subsidies, preferential lending, construction incentives and other instruments has allowed China to reduce the cost of transitioning from cheaper traditional reinforced-concrete construction to steel construction and has made steel structures more attractive to developers and investors.
Preferential mortgages for buyers of homes constructed using steel structures also play an important role in stimulating domestic demand in China.
When promoting steel construction among businesses and consumers, Russia could also follow China’s example by linking its advantages with green technologies, simplifying access to green financing, and developing certification for developers and steel structure manufacturers.
According to Matveenkov, greater attention should also be paid to research and development and technical support for steel construction.
He noted that the Chinese government stimulates technological progress in this area through various measures, including tax incentives and the establishment of research institutes.
It also facilitates access to research results through standards, unified rules, technical reference materials and databases.
The development of specialized university programs and professional training courses for engineers and managers is equally important.
Finally, based on China’s experience, the expert recommends introducing requirements that make steel construction mandatory or prioritized in selected sectors and geographic areas.
China’s emphasis on steel construction in rural and earthquake-prone areas helped create a guaranteed initial market for developers operating in these regions.
Original article published by Stroitelnaya Gazeta:
https://stroygaz.ru/publication/materials/kurs-na-vostok-blagodarya-kitayskomu-opytu-otkryvayutsya-novye-vozmozhnosti-primeneniya-stali-v-stro/
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