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China’s Environmental Market

I.  Market Overview

  1. China’s environmental industry has been developing in leaps and bounds in recent years. Investment in water conservancy, environment and public-facilities management amounted to RMB6.86 trillion in 2016, an increase of 23.3% year-on-year, according to statistics. Investment in the environmental sector is projected to exceed RMB15 trillion during the 13th Five-Year Plan period (2016-2020), with the focus of industrial development shifting from environmental pollution control to environmental quality improvement. Moreover, a large number of environmental projects, such as soil remediation, black smelly river treatment and sponge city construction, will be developed through public-private partnerships (PPP), which will in turn attract trillions of yuan in investment.

  2. The environmental market in China covers the equipment manufacturing and engineering of a wide spectrum of technologies and their related services. It includes the provision of equipment and services for environmental pollution control, removal of pollutants, waste treatment, energy conservation, clean production, as well as the collection, safe disposal, recycling and recovery of waste resources. It also covers services related to the protection of resources and the natural ecology.

    • Equipment produced in China for environmental protection is mainly for the prevention and treatment of water and air pollution. Other China-made equipment includes devices for the disposal and recycling of solid waste, noise control, prevention of pollution from radioactive and electromagnetic waves, and environmental monitoring.

    • The environmental services offered in China are largely in the areas of design and construction of environmental engineering projects, as well as the operation of treatment facilities. Other service areas include research and development of environmental technologies, environmental monitoring, and environmental consultancy services.

    • China also stresses the integrated utilisation of waste resources and their recovery, utilisation and renewal. Industry players focus on key businesses such as solid waste. The area mainly covers the integrated development and utilisation of intergrown and associated ores in the mining process; solid waste, wastewater, waste gases, residual heat and residual pressure generated in the production processes; as well as the recovery, utilisation and renewal of various kinds of waste resources generated in the course of production and consumption by different quarters of society.

    • Some industry players provide natural ecology protection services, including measures to protect the natural ecological environment from damage or to restore the impaired ecological environment. Special efforts are put into the protection of natural resources (e.g. forests), vegetation conservation works to address the water and soil-erosion issue, prevention of desertification, cultivation of grassland and building of eco-agriculture.

  3. Figures released by China’s Ministry of Environmental Protection show that in 2015, the total nationwide emissions of pollutants, namely COD (chemical oxygen demand), ammonia nitrogen, sulphur dioxide and nitrogen oxides, decreased by 3.1%, 3.6%, 5.8% and 10.9%, respectively. However, the country’s extensive economic development has resulted in serious environmental pollution and the concomitant economic cost and social problems have aroused great concerns from the government and the public. The demand for cost-effective solutions is therefore very keen on the mainland, forming a huge market for environmental protection service providers.

  4. According to the 13th Five-Year Plan for the Protection of Ecological Environment, the quality of the ecological environment has improved. In 2015, the average annual concentration of particulate matter (PM2.5) in 338 cities across the country at prefectural level and above was 50µg/m3. In the first batch of 74 cities subject to monitoring, their annual average PM2.5 concentration dropped 23.6% from 2013, with that in the Beijing-Tianjin-Hebei, Yangtze River Delta and Pearl River Delta regions down by 27.4%, 20.9% and 27.7%, respectively. Meanwhile, the proportion of acid rain areas in national land fell to 7.6% from 30%, a testament to efforts to tackle air pollution.

  5. In 2015, total investment in treating environmental pollution nationwide reached RMB880.33 billion, down 8% from 2014 and accounting for 1.3% of GDP. Of this, RMB494.68 billion was invested in urban environmental infrastructure, RMB77.37 billion in treating contaminant sources of old industries, and RMB305.88 billion in environmental protection inspection and acceptance of construction projects.

  6. The new Environmental Protection Law, which came into effect on 1 January 2015, aims to tackle environmental pollution issues, including authorising environmental protection departments to seize, impound or close facilities that cause serious environmental pollution, and to order units emitting excessive pollutants to limit or cease production for rectification, as well as imposing heavier penalties and punishments on non-compliance.

  7. During the 13th Five-Year Plan period, China will step up the implementation of policies to save energy, reduce emissions and protect the environment. For example, the plan pinpoints the need to strengthen environmental protection and pollution control to ensure sustainable social and economic development. Steps will be taken to implement pollution control action plans, strictly enforce various environmental indexes, and promote pollutant discharge standards and reduction of total emissions by more than 10%. Measures include the orderly relocation, transformation or closure of heavily polluting enterprises in built-up urban areas, and the implementation of clean production transformation in key industries. Regulatory requirements for industrial pollution sources to meet emissions standards will be fully implemented, polluting enterprises that fail to meet pollutant discharge standards will be revamped, projects that cause serious pollution will be banned, urban domestic sewage and refuse treatment will be fully implemented, and enforcement of relevant laws will be strengthened.

  8. The recovery and treatment of waste electronic products is also one of the businesses under development. The Regulations for the Administration of the Recovery and Disposal of Waste Electrical and Electronic Products (China WEEE) came into force on 1 January 2011. Five types of waste/used electronic products, including televisions, refrigerators, washing machines, air conditioners and computers, are included in the First Product Catalogue of China WEEE. Subsequently, the 2014 edition of the WEEE Catalogue increased the number of types of waste electronic products to 14 by adding items including printers, mobile phones and telephones. This new catalogue, in force since 1 March 2016, aims to bolster the recovery and administration of waste electronic products.

  9. The China Environmental Labelling Programme is a voluntary product certification labelling scheme administered by the Ministry of Environmental Protection. Products carrying this label comply with specific environmental requirements on their design, production, usage, handling and disposal, and have such environmental advantages as low toxicity, low hazard and resource conservation over similar products. With green consumerism on the rise, certified products are increasingly in demand, prompting more manufacturers to apply for environmental labels for their products that have passed relevant tests.


II.  Market Competition

  1. In China’s environmental industry, treatment of sewage, air pollution and sold waste account for 98% of total output value. During the 13th Five-Year Plan period, some enterprises would, by way of business expansion or acquisition, extend the industry chain and broaden business scope to become integrated environmental-services providers.

  2. As of today, a number of leading enterprises are already well-positioned in China’s environmental market. They include Thunip Corp Ltd, Zhonghang Yinyan, and Guangzhou Yueshou Environmental Holdings. These key enterprises provide a range of credible technologies and products in the areas of wastewater, air pollution and solid-waste treatment. For instance, Thunip’s Fiber Rotating Disk Filter is the largest of its kind in the world.

  3. In 2016, more than 6,000 units were engaged in environmental-protection related industries in the country, with total revenue amounting to more than RMB250 billion. According to the Opinions on Fostering Environmental Governance and Ecological Protection Market Players, efforts would be made to nurture more than 50 environmental enterprises with an output value exceeding RMB10 billion, and establish by 2020 a number of international environmental companies with advanced technology, strong integrated services ability and substantial brand influence.

  4. Meanwhile, multinational companies have been actively pursuing the China market through exports of their products, technology transfer or the establishment of joint ventures with local entities. The majority of the processing equipment used in China is imported from overseas. A case in point is Stuttgart University of Germany, which joined hands with Wuhan Iron and Steel Corp and China Ecotek Corporation of Taiwan to set up Wuhan Huade Environmental Engineering & Technologies Co Ltd in 2003. It aims to provide environmental solutions in wastewater, air pollution, solid-waste treatment, energy from waste and advanced biological technologies. At the same time, the French Veolia Environmental Services Group has established an office in China to offer special waste, wastewater treatment and other environmental services, as well as the management of water resources.


III.  Exhibitions

The environmental market in China is still in its development stage. Related exhibitions and expositions serve as business platforms for industry players to learn from one another, share experiences and explore business opportunities. The following are some of the upcoming exhibitions to be held in major mainland cities.

Selected Environmental Exhibitions in 2017 and 2018

7-11 November 2017Environmental Protection Technology & Equipment ShowNational Exhibition and Convention Center, Shanghai
8-10 December 2017International Trade Fair for Energy Conservation and Environmental ProtectionCentury City New International Convention and Exhibition Center, Chengdu
29-31 March 2018Wuhan International Exhibition of Water Supply, Drainage and Water Treatment ExhibitionWuhan International Expo Center
26-28 April 2018Expo Clean for Commercial Properties and HotelsShanghai New International Expo Centre
3-5 May 2018IE Expo - WaterShanghai New International Expo Centre

Note: please refer to official information from organisers for exhibition details


IV.  Import and Trade Regulations

  1. Since the implementation of Supplement II to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in January 2006, all products of Hong Kong origin, including those related to environmental protection, can be imported into the mainland at zero tariffs. On the other hand, Hong Kong service providers can set up wholly owned enterprises on the mainland under CEPA to provide architectural design and engineering services etc, including those in relation to environmental system engineering services. When Hong Kong service providers set up construction engineering design enterprises in China, their track record in Hong Kong and on the mainland can be used by the authorities as the basis for assessing their application for enterprise qualification.

  2. Also, under Supplement IV to CEPA, starting from 1 January 2008, Hong Kong service providers may set up wholly owned enterprises on the mainland to provide the following environmental services (not including environment quality monitoring and pollution source inspection):

    A.   Sewage discharge services (CPC 9401)
    B.   Solid waste treatment services (CPC 9402)
    C.   Waste gas cleaning services (CPC 9404)
    D.   Noise abatement services (CPC 9405)
    E.   Nature and landscape protection services (CPC 9406)
    F.   Other environmental protection services (CPC 9409)
    G.   Sanitation and similar services (CPC 9403)

  3. Pursuant to Supplement V to CEPA, the mainland agreed that with effect from 1 January 2009, Guangdong is permitted to approve the qualification of the Hong Kong service suppliers for setting up enterprises to operate environmental pollution control facilities in the province. Also, pursuant to Supplement IX to CEPA, from 1 January 2013 Guangdong can approve Hong Kong service suppliers for undertaking entrusted environmental monitoring activities in the province. These have greatly simplified the formalities involved in the application by Hong Kong service companies to mainland authorities for permission to provide environmental services in Guangdong.

  4. Pursuant to Supplement X to CEPA, the mainland agreed that with effect from 1 January 2014, the substantive business engaged by Hong Kong service suppliers in the operation of environmental pollution control facilities in both Hong Kong and the mainland can be taken into account in assessing their applications for the qualification in the operation of environmental pollution control facilities on the mainland.

  5. Pursuant to the Agreement Between the Mainland and Hong Kong on Achieving Basic Liberalisation of Trade in Services in Guangdong, with effect from 1 March 2015, Hong Kong service providers offering the aforementioned environmental protection services (A to G) in Guangdong by means of commercial presence are entitled to national treatment.

  6. Pursuant to the Agreement on Trade in Services under CEPA signed on 27 November 2015, from 1 June 2016, Hong Kong service providers can enjoy national treatment when providing environmental protection services listed in items A to G above on the mainland in the form of commercial presence.

  7. The Administrative Measures for Approving Qualification for the Operation of Environmental Pollution Control Facilities came into force on 1 August 2012. The administrative measures provide that entities engaged in operating environmental pollution control facilities must apply for a certificate of qualification for their operation, and must operate such facilities in accordance with the provisions set out in the certificate of qualification. Entities not issued with the certificate may not engage in operating environmental pollution control facilities.

  8. China has implemented the Measures for the Administration of Pollution Control of Electronic Information Products (commonly called China RoHS) since 1 March 2007 and the Measures for the Administration of the Prevention and Control of Environmental Pollution by Electronic Wastes since February 2008 to control and reduce the possible environmental pollution brought about by electronic products. Moreover, the China WEEE came into force on 1 January 2011.

  9. The Ministry of Environmental Protection has established various national environmental standards and related technical requirements, and amended existing ones in response to changes in actual situations. These industrial standards are directly related to the environmental industry and several of its related businesses, including:

    • The Environmental Protection Standard for Water
    • The Environmental Protection Standard for Atmosphere
    • The Environmental Noise and Vibration Standard
    • The Environmental Protection Standard for Soil
    • The Solid Waste and Chemical Pollution Control Standard
    • The Environmental Protection Standard for Nuclear Radiation and Electromagnetic Radiation
    • The Environmental Protection Standard for Ecology
    • The Clean Production Standard
    • The Technical Regulations for Environmental Protection Works
    • The Technical Requirements for Environmental Protection Products

    Detailed information (in Chinese) on these standards and technical requirements is available from the relevant section on the Ministry of Environmental Protection website.

Content provided by Picture: HKTDC Research
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