New Infrastructure Construction Uncovers Huge Business Opportunities

By Audrey Guo

At the Politburo meeting of the CPC Central Committee held on March 4， 2020， policy-makers emphasized the promotion of key projects and infrastructural constructions clarified in national planning， in particular the construction of the 5G network， data centers and other new infrastructure. This decision threw “new infrastructure construction” into the spotlight again.

In practice， traditional infrastructure construction mainly involves projects such as railways， roads， airports， ports and water conservancy facilities， while new infrastructure construction mainly focuses on new technologies and covers seven major sectors， including 5G infrastructural construction， extra-high voltage power， inter-city high-speed railways and inter-city rail， electric vehicle charging piles， big data centers， artificial intelligence and industrial networks. These seven sectors are related to telecommunications， power， transportation and the digital economy.

The research report entitled Chinas New Infrastructure （2020） released by DTZ shows that the seven sectors covered by new infrastructure contain huge business opportunities. Due to this huge multiplier effect， new infrastructure will become the major engine to propel Chinese economic growth and create more jobs.

The report points out that the outbreak of the COVID-19 pandemic has posed new challenges to the Chinese economy， which is is under pressure of economic decline. The pandemic has suppressed consumption and largely reduce exports across the globe. In order to maintain the growth momentum of the economy， investment became the major tool for stimulating economic growth in 2020. Infrastructure construction also plays an important role in driving economic growth and creating job opportunities due to the huge investment volume. It is one of the most effective measures for stabilizing and promoting Chinese economic growth at the current stage.

The DTZ Research Institute says that the continuous improvement of the new infrastructure will allow the wide application of new technologies. 5G， artificial intelligence， big data， industrial networks and other new technologies will stimulate the growth of intelligent manufacturing， intelligent energy， intelligent medical services， intelligent transportation， intelligent logistics and intelligent retail. In addition， the development of inter-city high-speed railways and rail， extra-high voltage power， and new energy vehicle charging piles will play a positive role in boosting consumption and promoting the development of city clusters.

Moreover， DTZ has predicted the trends of direct and indirect output in the 5G industry： in terms of financing channels for infrastructural construction， the government has initiated pilot experiment policies for REITs， in order to vitalize the current assets and stimulate private investment in new infrastructure. The final purpose of this is to de-leverage the economy， prevent risks and expand investment sourcing for infrastructural projects. The seven sectors focused on by new infrastructure are closely related to the development of metropolitan circles. The trend is for each sector to congregate around a metropolitan circle or key city. The metropolitan circle will be always the key engine of Chinese economic growth， and will become the focus of new infrastructural investment. This will also provide fresh opportunities for the development of new infrastructure.

5G： in 2020， the three major telecom operators built more than 550，000 5G base stations

Field of application： industrial networks， internet of vehicles， internet of things， enterprise on the cloud， artificial intelligence， long-distance diagnosis

5G is the leading project of “new infrastructure”. Many of Chinas key emerging industries will rely on 5G technology for development. Since the 5G licenses have been issued， the three telecom operators have accelerated their endeavors to build a 5G network. During the COVID-19 pandemic in 2020， 5G was used to make prominent contributions to the prevention and control of the pandemic and the resumption of work and production. Recently， the three major telecom operators released their annual report for 2019， in which they raised the 5G development plan for 2020. China Mobile plans to invest RMB 100 billion and build 250，000 5G base stations to cover cities above the prefecture level. It also plans to enhance the coordination between 4G and 5G and develop towards an SA network， in order to meet the demands of To C and To B. China Telecom plans to invest RMB 45.3 billion and work with China Unicom to build 250，000 5G base stations to cover all the cities above prefecture level， and also plans to invest RMB 35 billion into 5G network equipment， core networks， transmission facilities， business platforms and charging upgrading. Apart from the telecom operators， provinces and cities have also issued related policies， including the Fujian Provinces Opinion on Accelerating the Development of the 5G Industry and the Beijing 5G and Future Infrastructural Construction Planning （2019-2035）. The data shows that by the end of February of 2020， Chinas provinces and cities had issued over 200 5G-related policies.

Big data centers： large， superlarge and periphery data centers become mainstream

Field of application： the financial industry， telecommunications

Data centers have garnered widespread attention since the concept was raised. According to the 2019-2020 China IDC Industry Development Research Report released by KZ Consulting， it is estimated that the CAGR （Compound Annual Growth Rate） for Chinas IDC business market will reach 26.9%. By the year 2022， Chinas IDC market value will have surpassed RMB 320.05 billion， up by 28.8%. The whole industry will enter a new booming cycle.

Stimulated by national policies， data centers will become larger in size and scale， in order to meet Chinas increasing demands for data storage. By 2025， a number of large， super-large and periphery data centers will have been established.

Industrial networks： the market value will reach RMB 914.65 billion in 2022

Field of application： intelligent manufacturing within enterprises， network-based cooperation between different enterprises， personalized manufacturing for companies and customers， the extension of corporate and product services

Among the seven sectors involved in “new infrastructure”， industrial networks are connected with the other six sectors. They can be integrated with 5G base stations to apply industrial networks in the 5G arena； they can be integrated with extra-high voltage power and new energy charging piles to develop smart grids； they can be connected with inter-city high-speed railways to construct intelligent rail systems； they can be integrated with big data center to develop industrial cloud and big data applications； and they can be integrated with artificial intelligence to advance intelligent industrial application.

In 2019， Chinas industrial network market value reached RMB 610.91 billion， up by 14.0% from the previous year. As the cloud service eco-system has improved， and as the government has issued more policies to encourage investment in the transition and upgrading of the manufacturing industry， Chinas manufacturing companies have continued to invest more in information technology. It is estimated that in the next three years， Chinas industrial network market will increase by 14.4% each year. The industrial network market will increase to RMB 914.65 billion in 2022， and there will be between three and five industrial network platforms with international competitiveness by the year 2025.

Extra-high voltage power： new round of construction launched， with investment expected to surpass RMB 150 billion

Field of application： electric power and the energy industry

The new infrastructure policies will stimulate the fragile investment in the electric grid. Chinas extra-high voltage power will satisfy a new round of booming construction. 12 transmission lines will be rebuilt to be suitable for extra high voltages， with a total investment of more than RMB 150 billion. It is estimated that by 2025， Chinas transmission lines for extra high voltage power will surpass 40 thousand miles.

The State Grid is also increasing the budget for extra high voltage investment from RMB 33 billion in early 2020， to RMB 112.8 billion on March 11. According to a news report about work resumption， investment in the extra high voltage project would have reached RMB 181.1 billion in 2020.

New energy vehicle charging piles： in 2020， more than 12，000 centralized charging and battery-changing stations were constructed

Field of application： new energy vehicles

As the number of Chinas new energy vehicles rises rapidly， the demand for charging equipment has also been increasing. The central government has required local institutions to shift subsidies from new energy vehicles to charging equipment. Thanks to this policy support， the industry will enter a new phase of rapid growth. It is estimated that in 2020， there were more than 12，000 newly-built charging piles and battery-changing stations， with more than 4.8 million distributed charging piles. It is estimated that by 2025， more than 36，000 charging piles and battery-changing stations will be built， with the ratio between vehicles and charging piles being 1：1.

Artificial intelligence： new-generation artificial intelligence innovation development experiment zone will be established

Field of application： smart homes， service robots， mobile equipment/UAVs， automatic driving

AI mainly includes products and services that are universally or specifically applied in certain areas. AI technology focuses on independence and farsightedness and AI services place emphasis on general benefits and low costs.

The infrastructural functions of AI technology have not yet shown themselves. At the current stage， it is wrong to haphazardly invest in new AI infrastructure. On the contrary， it is important to combine top-level planning with regional pilot experiments， and to tend the relationship between government guidance and AI companies innovation. The purpose of this is to accelerate the formation of AIs infrastructural functions. It is estimated that by 2023， approximately 20 new-generation AI intelligent innovation development experiment zones will have been constructed.

Inter-city high-speed railways and inter-city rail traffic

Field of application： transportation industry

As pressure caused by the economic slide increases， investment in high-speed railways will become a strong measure to cushion against negative effects. As the construction of high-speed railways and city rails gain more traction， companies will see more orders in the near future. It is recommended to focus on flagship companies in the railway and transportation industry chain.