China just added what looks like a small country to its landscape. Beijing International Airport's new Terminal Three has a design capacity of 50 million passengers per year -- enough to serve Beijing's population three times over.
The new terminal is larger than all five terminals of Heathrow Airport put together. Yet it cost just half of what Heathrow will spend on its new Terminal Five, and was built in a third of the time. Its 1.3 million square meters -- roughly equivalent to 240 football fields -- make it the world's largest covered structure. Naturally, a host of international companies benefited from this megaproject, including L-3 Communications (NYSE: LLL), Siemens (NYSE: SI), CB Richard Ellis Group (NYSE: CBG), and Canada's Bombardier.
The coming "spendathon"
China's Olympian infrastructure plans extend way beyond the 2008 Beijing Olympics. Under its 2006-2011 plan, it has embarked on a mind-boggling $500 billion buildup of its total transportation capability to manage galloping demand. That's a 73% increase in spending over its last five-year plan!
Airports: With passenger air traffic having grown more than 20-fold in the past 20 years, China plans to spend $19 billion to add 97 new airports, bringing its total to 244 by 2020. Beijing is already scouting for space to add another airport. Thirteen of the nation's airports will have a design capacity of more than 30 million passengers annually. According to Boeing (NYSE: BA), China will need to add more than 3,300 planes to cope with its air traffic demand by 2026, effectively quadrupling its current capacity.
Railways: China's rail network handles more passengers and cargo than any other in the world, yet meets only 40% of demand. It plans to spend $190 billion on rail infrastructure, in what the World Bank describes as the biggest expansion of railway capacity undertaken by any country since the 19th century. Work has already started on an 800-mile bullet train between Beijing and Shanghai to cut rail travel time between the cities from 10 hours to five.
One Chinese company gearing up for this "spendathon" is China Railway Construction, which just raised $5.5 billion in a simultaneous IPO on the Shanghai and Hong Kong exchanges. It boasts a nearly 50% share of China's rail construction projects, and has attracted prestigious investors like Yale University and Singapore's Temasek Holdings.
Bombardier, Siemens, and France's Alstom are among the international competitors racing to catch this money train.
Roads: According to the World Bank, China has about five miles of road for every 100 square miles of its area, compared to roughly 22 miles for the U.S. However, because of the massive difference in populations, China's road network caters to nearly 1,100 persons per road mile, compared to fewer than 70 for the United States.
To tackle this daunting challenge, China's "National Trunk Highway System" plan is to build more than 50,000 miles of high-grade expressways by 2020. Also, under its "new socialist countryside" program, China will build and upgrade 165,000 miles of rural highways in 2008.
Shipping: China is blessed with large navigable rivers connecting many major cities, and most of its warp-speed development is adjacent to its southeastern coastline. To capitalize on these assets, China is dredging its major waterways and accelerating construction of inland ports, while port transit and container systems are being added and upgraded at 12 seaports.
One Chinese company poised to benefit is China Communications Construction, the world's biggest builder of ports.
Did you say "slowdown"?
Despite all the gloom and doom going around, last year China accounted for nearly 18% of global GDP growth. Even if China follows through on only half of its planned infrastructure spending, it would keep a lot of Chinese and global vendors humming for quite awhile. And, judging by the way prices of industrial materials like steel, aluminum, and tin have climbed in recent years, global markets are clearly betting that China's Olympian plans will bring home the gold.
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