The Chinese economy is heavily impacted by the real estate downturn, leading to a sharp decline in domestic cement demand. In response, Chinese cement manufacturers are seeking international markets to sustain operations. Meanwhile, the government is ramping up investments in infrastructure projects both domestically and abroad to stimulate economic growth.
Declining Demand Due to the Housing Crisis
In 2024, cement demand in China dropped by 8% year-on-year, reaching only 1,858.9 million tons. Cement plant capacity utilization fell to 50%, while cement production decreased by 9.8% compared to 2023, according to China’s National Bureau of Statistics (NBS). This trend is expected to continue as the country’s real estate sector remains in crisis, forcing cement producers to seek overseas markets.
China’s housing market is facing severe difficulties due to an oversupply of properties, causing home prices to plummet in many cities. Minister of Housing and Urban-Rural Development Ni Hong stated that the government had approved a “white list” of eligible housing projects for financing, totaling $562 billion by the end of 2024. However, according to Goldman Sachs, the total value of unsold real estate, if completed, could reach CNY 93 trillion ($13 trillion), far exceeding the number of newly constructed homes.
Despite government measures such as a CNY 200 billion loan program for state-owned enterprises to purchase excess housing inventory, the situation has yet to improve. Research from Goldman Sachs suggests that a stimulus package of up to CNY 8 trillion would be necessary to resolve the construction backlog and restructure debt in the real estate sector.
Investment in Domestic and International Infrastructure
To counter the economic slowdown, the Chinese government is actively investing in large-scale infrastructure projects. One notable project is the construction of the world’s largest hydroelectric dam on the Yarlung Tsangpo River, with an estimated cost of CNY 127 billion. This dam is expected to generate three times the electricity output of the Three Gorges Dam, currently the world’s largest hydroelectric plant.
As domestic market challenges persist, Chinese construction firms are expanding their investments abroad. Infrastructure projects in Vietnam, particularly the high-speed railway connecting China and Vietnam, are attracting significant interest. China’s construction firms have also prioritized Hanoi and Ho Chi Minh City’s metro systems. Vietnam’s 1,500-km North-South high-speed railway is already under construction and is expected to be completed by 2035.
Additionally, China is expanding its infrastructure investments in Bangladesh under the Belt and Road Initiative (BRI). As of 2023, 150 countries had joined BRI, with trade between China and these nations accounting for more than 50% of China’s total trade volume in 2024.
Amid economic uncertainty, the strategy of boosting cement exports and expanding overseas investments could help Chinese companies sustain growth while mitigating the impact of the domestic real estate downturn.
Source: ximang.vn