Protected at home, China’s construction companies will have to modernise to realise global ambitions.

China's excavator sales dropped 46% YoY in March, compared to a drop of 33% YoY in the combined January-February period. We think the sluggish excavator sales add to indications of sub-par fixed-asset investment (FAI) growth (CC Feb 23 2012 Big Call ) caused by slowdowns or cancellations of projects by fiscally squeezed local governments and property developers after a welter of project launches in 2009/2010. However, with social housing construction expected to pick up gradually in 2012 (CC Apr 5 2012, Big Call), excavator sales should start to rebound somewhat in the coming months.

Financial malaise is slowing fixed-asset investment growth, adding pressure on Beijing for some sort of bailout.

Prices for cement, steel, and glass are all set to decline in 1H12 due to weak demand from a softening real estate sector as government credit restrictions persist.

The once-firm bond between state banks and state-owned transport infrastructure builders is fraying, throwing a key motivator of economic growth into doubt.

Land sales are so central to local government finances that their current slowdown suggests an easing in fixed-asset investment.

Our survey shows local government officials are acting strongly to implement Beijing's crackdown on excess industrial capacity but several factors are likely to erode the force of the policy several months from now.