China announced a massive plan of infrastructure work this weekend to occur over the next two years, with the government stating it would "massively" crank up its spending on roads, railways, healthcare, education, power grids and low-cost housing.
So which sectors do you believe are likely to benefit from this expenditure?
This massive construction programme should reinvigorate the domestic construction industry, but do overseas companies get a look-in on contract tenders? Also the decline in metal prices over the summer, exacerbated by the total halt on construction before and during the Beijing Olympics, will receive a fillip, so I believe Steel prices should rise over this timeframe, along with nickel.
As a result of the demand for overseas ore, perhaps shipping rates will be picked up off the floor, once the current stalemate passes with bank's not writing letters of credit for carrier's cargoes. Is the Bulk Dry Index therefore bottoming?
China already has plenty of recent experience of building roads, railways, airports, power grids etc... so external expertise may be in limited demand so perhaps we need to look through at smaller ticket items where we can find an investment case buoyed by this news. For example, with transport infrastructure, there will be demand for CCTV, perhaps a company like RCG will benefit from RFID on packets of drugs, software companies may devise learning modules for Chinese students. I'm just throwing these ideas out there - perhaps they are non-starters but I bet we can come up with more.
Anyway, this is just a quick few thoughts which we can hopefully expand and develop this thread in order to benefit from companies who are China-facing and likely to experience increased demand.
