The pipeline construction sector is once again gaining momentum, fueled by supportive government policies aimed at accelerating infrastructure growth and modernization.
On December 5, 2024, the General Office of the Communist Party of China (CPC) Central Committee and the General Office of the State Council issued the Guideline on Promoting the Construction of New-Type Urban Infrastructure to Develop Resilient Cities (hereinafter referred to as the Guideline). The document outlines key objectives:
By 2027, significant progress will be made in the construction of new-type urban infrastructure, with an enhanced role in supporting resilient city development. A set of replicable and scalable best practices will be established.
By 2030, new-type urban infrastructure will achieve remarkable results, driving the development of high-standard resilient cities. Urban safety and resilience will continue to improve, ensuring cities operate in a safer, more orderly, smarter, and more efficient manner.
Notably, the upgrading of underground pipelines is highlighted multiple times. The Guideline emphasizes the need for localized digital transformation and intelligent management of municipal infrastructure, including urban water supply, drainage, power supply, gas, heating, fire hydrants, and underground utility corridors. It also calls for accelerating the construction of urban infrastructure “lifeline” projects, coordinating water supply networks with drainage and flood control systems, and enhancing the drainage and flood resilience of underground facilities and other key infrastructure.
The implementation of this major policy has drawn significant attention from capital markets. Industry experts indicate that resilient city development will create new growth opportunities for infrastructure sectors, with increasing demand in areas such as urban drainage network expansion, sewage treatment pipeline construction, natural gas pipeline upgrades, and underground utility corridor development. Leading enterprises holding significant market share are expected to benefit first from this new wave of underground pipeline renovation.
Surging Demand for Pipeline Infrastructure Across Regions
As China enters a stage of high-quality urbanization, resilient cities have become an inevitable choice.
In April 2020, President Xi emphasized for the first time in a Central Financial and Economic Affairs Commission meeting that “building resilient cities should be a key component of urbanization strategy.” Since then, the concept of resilient cities has been included in China’s 14th Five-Year Plan and the 2035 Long-Term Goals, as well as in the report of the 20th National Congress of the Communist Party of China.
The central government has placed great emphasis on resilient city development, accelerating local implementation.
For example, Beijing has released multiple policies, including the “Guiding Opinions on Accelerating the Construction of Resilient Cities” and the “Special Plan for Beijing’s Resilient City Development (2022-2035),” which comprehensively enhance urban resilience from planning to management. Meanwhile, Shanghai has introduced the “Urban Renewal Action Plan (2023-2025),” emphasizing intensive, sustainable, and low-carbon development while reinforcing the safety and resilience of mega cities.
As a key task in urban renewal, local governments are developing specific plans and goals for underground pipeline network renovation based on their own circumstances.
In Chengdu, the focus is clearly on improving the internal drainage network for 1,157 non-residential drainage users in the main urban area. Beijing plans to complete the renovation of aging urban gas and heating pipelines by the end of 2025. Yunnan aims to update and renovate over 30,000 kilometers of gas pipelines by the end of 2025.
By the end of 2023, the total length of urban water supply pipelines in China reached 1.103 million kilometers, drainage pipelines reached 913,500 kilometers, natural gas pipelines reached 980,400 kilometers, and heating pipelines reached 493,400 kilometers. Together, these four types of pipelines total nearly 3.5 million kilometers.
Since 2024, cities nationwide have been carrying out comprehensive checks, and the issues found in the pipeline networks will be addressed with greater effort. Preliminary estimates suggest that during the 14th Five-Year Plan period, the investment in underground pipeline network renovation will exceed one trillion yuan, with a promising outlook for the industry.
Plastic pipes and the related industrial chain will significantly benefit from this wave of development.
As pipeline infrastructure projects surge across the country, plastic pipelines—critical to infrastructure and municipal projects—are poised for a new phase of development.
During China’s rapid urbanization, the plastic pipeline industry has seen consistent production growth. Data shows that between 2000 and 2010, plastic pipelines gradually replaced some metal and cement pipelines, accelerating industry development with a nearly 30% compound annual growth rate. Stimulated by the 2008 “4 Trillion Yuan” policy, the industry experienced another phase of rapid growth.
Zheshang Securities points out that under new urban planning and construction concepts, pipeline development is shifting from quantitative expansion to qualitative improvement. The underground pipeline renovation initiative will enter a “new ten-year cycle” starting in 2024.
The firm estimates that over 100,000 kilometers of pipelines will undergo renovation annually from 2024, presenting significant market potential with at least ¥100 billion in yearly investments. This underground pipeline construction cycle may coincide with urban village redevelopment, extending market expansion for 5–10 years. In terms of revenue, pipeline renovations—including repairs, replacements, and relocations—cover a wide range of engineering work and are expected to drive a 5.7%–8% increase in pipe material sales.
At the central level, the government funding ensures strong support for pipeline construction, continuously expanding market scale and attracting significant capital market attention to industry leaders.
As a leading enterprise in the engineering plastic pipeline industry, LESSO derives approximately 80% of its revenue from the plastic pipeline sector. Data shows that over the past three years, the company has maintained a market share exceeding 20% in plastic pipelines, nearly 26% in PVC pipelines, and consistently outperforms competitors in both sales revenue and gross profit margin, securing its industry-leading position.
LESSO is one of China’s most comprehensive pipeline material manufacturers, offering thousands of high-quality products covering municipal water supply, drainage, energy management, power communication, gas, fire protection, environmental protection, agriculture, and marine aquaculture.
LESSO operates over 30 advanced production bases across 19 provinces in China and multiple international locations. It has also built a nationwide distribution network and long-term strategic partnerships with 2,891 exclusive first-tier distributors, ensuring the timely and efficient delivery of high-quality products and services. Guangfa Securities believes that LESSO’s extensive production scale and strong supplier partnerships provide significant cost and distribution advantages, paving the way for further market expansion.
At the December Central Economic Work Conference, plans were outlined for a “more proactive fiscal policy” and a “moderately loose monetary policy” in 2025, with support set to reach its highest level in a decade. Infrastructure development will remain a key driver of domestic investment.
With increased fiscal support and accelerated construction of key projects, infrastructure investment growth is projected to reach around 7% in 2025, up from 4.1% in the first three quarters of 2024. As the industry enters an upward cycle, LESSO is set to further expand its market share and reinforce its leadership, leveraging its strengths in production, distribution, cost efficiency, and product quality. The surging demand for underground pipeline upgrades and urban renewal will provide strong market support for its growth in the coming year.
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