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Economy

China's feeble construction sector dims outlook for GDP rebound

Many projects not deemed crucial remain abandoned for lack of workers

With many construction projects resuming work only recently, China has recorded its first quarterly economic contraction. (Photo by Issaku Harada)

BEIJING -- China's economic contraction during the first quarter, the country's only quarterly decline on record, came as the coronavirus epidemic slowed or idled many construction projects and sapped an industry regarded as a key engine for growth.

The expansion of the China National Convention Center, 10 km north of Tiananmen Square in Beijing, represents one such project.

Several workers were in transit at the site one morning in early April. "When I came from Henan to Beijing, first I was isolated at a hotel for two weeks," said one construction employee native to Henan Province, describing the situation on the ground. "When that was over, I was isolated in a facility within the construction site for another two weeks."

Laborers are not allowed to gather in groups. The on-site dormitory can fit six people in a room, but workers are forbidden from visiting other rooms.

"Half of the workers have not returned yet," said the employee. "I think work will be delayed by two months because of the coronavirus."

The convention center is slated to serve as the media center during the 2022 Winter Olympics in Beijing. Nearby are the Olympic Village and the Beijing National Indoor Stadium, which will host ice hockey.

All work on those sites began in the early morning. Beijing city authorities say Olympic construction work has restarted across the board.

Premier Li Keqiang was instrumental in getting those projects up and running. In mid-March, he ordered 11,000 major projects to pick up pace. Many of them are state-led infrastructure work, including the Winter Olympic venues.

Beijing is counting on major construction projects to jump-start the economy by creating trickle-down effects. China's government boosted infrastructure work following the global financial crisis in 2008. The construction industry's share of the country's gross domestic product rose from 5.9% that year to 7.2% in 2019, an all-time high.

The industry added 13 million workers over five years to the end of 2018, reaching a total of 67 million. Chinese manufacturing lost 13 million jobs during the same span, and construction essentially absorbed the displaced laborers.

Projects deemed not crucial remain abandoned. (Photo by Issaku Harada)

But this time around, with the pandemic still hampering people's movement, projects not identified as crucial national projects have remain abandoned. 

No laborers could be seen recently at the site for a new long-term care facility being constructed by the conglomerate Citic. Work has been halted since November.

"I don't know when workers can be recruited," said a worker involved in the project.

Interior contractors for condominiums, a job done by micro to midsize companies, face an even worse situation.

Wang Jun, an interior contractor from Anhui Province, had to complete a 14-day quarantine upon returning to Beijing from a trip home. Though Wang has received orders, "I can't do any work," he said. "Everywhere is off limits."

Because schools are closed, most children are studying online at home, which prevents him from getting permits to start contracting work.

"The noise from the construction would get in the way of learning," he said.

Wang normally starts work three weeks after the Lunar New Year holiday.

"This year, I've had no income for three months," he said. "I'm about to be crushed by my mortgage and vehicle loan, but I can't do anything about it."

Back in Anhui, interior construction work has been authorized, but there are no signs of that ban being lifted in Beijing.

"This year has been really hard," Wang said.

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