The good news is projects tend to last two to four years . And by my count , this activity marks the greatest acceleration in new project starts since 2009 . This should be supportive for commodity prices and global mining companies through the first half of 2017 .
There is a lot of skepticism out there right now about private sector capital expenditures , too — but there are early signs cape is recovering , with real interest rates down and some sectors showing obvious capacity shortages .
To be sure , I do expect growth to slow in the second half of this year , especially with mortgage credit slowing and home sales having flattened .
Pockets of Strength in the Housing Market
There is a lot of bearishness about China ’ s housing sector .
Home sales skyrocketed in 2016 , as did prices , with approximately US $ 1.4 trillion in new housing sold . Worried about a property bubble , government authorities are curbing incentives and rolling out buying restrictions as well as stricter lending requirements in some larger markets .
This is certainly impacting activity in China ’ s 30 largest cities , where sales fell 20 % year on year in November . The market ’ s expectation now is that new housing starts will fall , denting gross domestic product growth and demand for commodities such as iron ore , copper and cement .
I agree that sales will slow , but not to the degree that most suspect .
Outside of the 30 largest cities , sales remain stronger due to affordability and the absence of government purchase restrictions . Immigration into smaller cities from surrounding rural areas will continue , pushing up the urbanization ratio from its current 55 % level to nearer 70 % to 80 % over the next two decades . A lot of urban households want to upgrade their apartments , too . Interest rates also remain low , which should continue to support sales across most markets .
Furthermore , we have moved past the horror stories of ghost cities . Inventories continue to shrink nationally and housing stock in the bigger cities is at pre-glut levels . Inventories remain high in many smaller cities , though , so this is still a challenge .
Along those lines , new housing starts should continue to grow for the next three to six months , I think . Historically , housing accounts for twice the commodities demand of