Performance of the construction sector under pressure in 25H1; prioritize high dividend yields and niche high-growth tracks.
The Breakdown
The first half of 2025 revealed pronounced volatility in China’s construction sector, as revenue declined 5.5% and sector profit fell over 6%, compared to the same period last year. This softness was attributed to shrinking gross margins and modest increases in operational expenses. While infrastructure-linked central state-owned enterprises (SOEs) maintained robust performance, sub-sectors such as chemical engineering and steel structures exhibited distinctive pockets of growth. An accelerated issuance of special bonds is anticipated to catalyze infrastructure investment in the second half, possibly setting the stage for a gradual sector recovery.
Analyst View
The softening of overall construction demand reflects evolving end-market needs, with commercial and residential segments under significant strain. Conversely, resilience in infrastructure investment—especially within central and western Chinese regions—highlights a continuing pivot of demand toward public projects, underscoring the importance for raw material providers in chemicals and polymers to track shifts in project funding and geographic opportunity zones.
The reallocation of new special bond funding signals a near-term boost in public construction and related material demand, though increased leverage across the sector points to longer-term risks and pressures—especially for firms exposed to non-infrastructure segments. Competitive alternatives are also evolving: as specialty engineering and steel/chemical subsectors outperform, business leaders must re-examine their positioning and value propositions in the context of differentiated growth trajectories.
The sector’s financial dynamics underscore growing operational complexity. While some SOEs and local entities demonstrate admirable resilience, other players experience margin compression and increased cash outflows. Amidst tightening regulatory environments and concerns over tariff risks, forward-thinking leadership will require sharper vigilance on capital flows, execution agility, and channel support to maintain advantage.
Navigating the Signals
For specialty chemicals and polymers suppliers, the pronounced split in sub-sector performance points to a growing imperative to revalidate where (and with whom) to engage. The stability of infrastructure pipelines brings near-term opportunity, yet persistent volatility and declining margins elsewhere demand a disciplined approach to resource allocation and partnership selection.
This climate raises several executive questions: How resilient are your core end-markets against shifting policy and funding priorities? Can your organization rapidly redirect innovation or sales support to align with growth sectors like chemical engineering or steel structures? What vigilance measures are needed to protect share and profitability against future regulatory or macroeconomic shocks?
Put simply, leaders who act early to reinforce value chain collaboration and deepen market intelligence—especially regarding cash flows, public funding trends, and the evolving landscape of SOEs—will outperform. The strategic balance will favor organizations that combine operational flexibility, proactive risk management, and sector-specific responsiveness.
What’s Next?
Breakthrough Marketing Technology empowers leaders in chemicals and polymers to navigate today’s construction market volatility with confidence. Our tailored approach helps you:
- Pinpoint market shifts impacting your product and sales forecasts
- Identify lucrative value chain partners in resilient and high-growth sub-sectors
- Anticipate regulatory headwinds or funding inflection points
By leveraging robust, data-driven insights and scenario modeling, we accelerate your ability to make decisive, risk-smart investments and build future-ready go-to-market strategies—ensuring your organization is prepared for both the turbulence and opportunity ahead.
Source
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