Environment and water management to China

Trends and opportunities

Clean Energy and Environment - China

Be part of a unique initiative to encourage exports between Australia and China in the environment and water sector.

The Austrade Environment team is supporting a platform to introduce capable Australian firms to environment protection projects, opportunities and contacts in China. Austrade is working with the Chinese Foreign Economic Cooperation Office (FECO) under the Chinese Ministry of Environmental Protection on its 3iPET Platform (the International Platform for Environmental Technology) to introduce leading Australian technologies to match Chinese requirements in air, water and soil pollution control and management.

Austrade has developed capability documents in water translated into Chinese language to showcase Australian capabilities. This is marketed to Chinese organisations in relevant industry sectors such as urban water recycling, waste water treatment, remediation and waste to energy generation.

Companies in this initiative are also able to connect via Austrade Business Development Managers working on-the-ground in China. These managers provide services ranging from cultural awareness to business matching.

The market

China is experiencing the fastest growth in demand for environmental products and services in the world. China's environmental protection industry has developed in response to growing environmental degradation over the past two decades. The industry produces the majority of its own goods and services for pollution control and environmental protection, though there are specific areas where the technology levels are low and below international standards.

China’s 13th Five-Year Plan 2016-2020

The 13th Five-Year Plan 2016-2020 for Environmental Protection, which is currently being drafted will specify the past achievements in pollution control and set new goals for the upcoming Five-Years. Some highlights related to the environment industry include:

  • A nationwide real time online environmental monitoring system to be set up and an emission permit system that will cover all companies with stationary pollution sources.
  • A strict management system for water resources to be implemented and a national monitoring system established for groundwater.
  • Clean production to be promoted and green and low-carbon industry systems set up.
  • Green finance to be promoted and a green development fund established.

The 13th Five-Year Plan will establish binding limits for volatile organic compounds and PM2.5 emissions. The core focus will shift to improving environment quality from merely controlling the emission of major pollutants. The new binding limits on VOC and PM2.5 join previous targets on the reduction of sulfur dioxide, nitrogen oxides, chemical oxygen and ammonia nitrogen, which all governments reached during the 12th Five-Year Plan 2010-15. The focus on improving environmental quality provides a framework for future pollution controls for different regions based on their local situation.

China will also implement three major prevention action plans on air; water and soil pollution. The country will see the improvement in water and soil quality after a series of strengthened efforts:

  • Implementation of the air, water and soil pollution prevention and control of the three action plans
  • Acceleration of the construction of green development and ecological sensitive construction and cities
  • Promotion of supply-side structural reforms, and strengthened environmental risk prevention and control efforts.

(Source: Speech by Mr Chen Ji Ning, Minister of MEP, 2016 China Environment Protection Working Conference, 12 January 2016)

Ten Measures on Water - China’s Major Environment Campaign

China is facing huge challenges with the environment and water quality due to rapid urbanisation. China has 6 per cent of the world’s total fresh water and 19 per cent of the world’s population. Currently, many areas in China still suffer poor water quality, heavily damaged water ecology, low capacity to secure water resources, acute water pollution problems and a large number of environmental risks. An example of this is China’s ground water where over 60 per cent is severely contaminated and unsuitable for both agricultural and human use (Source: Chinese Ministry of Land and Resources, 2015). Similarly, industrial waste water is polluting waterways leading to ecological damage, damage to human health and ultimately limited economic growth.

The Chinese Central Government is ready to fight the three major environmental battles on air, water and soil. Following the release of the Action Plan for Air Pollution Prevention and Control (known as the Ten Measures on Air) in September 2013, China released its long-awaited Action Plan on Water Pollution Prevention and Control (Ten Measures on Water) on 16 April 2015. The Chinese Ministry of Environmental Protection (MEP) is also drafting an Action Plan on Soil Pollution Prevention and Control (Ten Measures on Soil). The new Environmental Law came into force on 1 January 2015, which is widely acknowledged as one of the strictest laws in Chinese history as it expands the scope of liability and increases the severity of punishment for enterprises that pollute. These coordinated actions on air, water and land pollution reflects the Chinese Government’s commitment to improve its seriously damaged environment.

Highlights:

  • A long term plan (from 2015-2050) setting the scene for the future (Phase I. 2015-2020, Phase II. 2020-2030, Phase III 2030-2050)
  • Approved by the highest authority in China, President Xi Jinping and released by the State Council, which demonstrates the importance and government commitment to tackle environmental issues
  • Assigned leading and supporting ministries and agencies against each action item to specify accountability and ensure a coordinated implementation of the plan
  • Local Governments required to prepare their implementation plans and make them public before 2016
  • The Organisation Department of the CPC Central Committee and the Ministry of Supervision are involved and allocated specific responsibilities to support KPI review of the local officials
  • The Plan covers 7 key river basins, 36 major cities, over 950 centralised water sources, over 4,000 underground water monitoring points, and 9 key river months and gulfs.

Main targets:

Besides outlining the overall objectives between 2015 and 2050, the Plan also sets out the main targets including.

By 2020:

  • 70 per cent or above of water in the seven major river basins shall reach a level suitable for drinking water supply and human use (Grade III or above)
  • The levels of black and odorous waters shall be less than 10 per cent in cities; the proportion of centralised drinking water source quality in built-up areas in cities at Grade III or above shall be higher than 93 per cent
  • The proportion of extremely poor groundwater quality nationwide shall be controlled around 15 per cent
  • The proportion high Grade I and II water quality in offshore areas shall reach around 70 per cent
  • The proportion of unusable (below Grade V) water bodies in Beijing-Tianjin-Hebei Region shall be reduced by 15 per cent
  • The Yangtze River Delta and Pearl River Delta shall strive to remediate current unusable water bodies.

By 2030:

  • The overall proportion of water quality in the seven major river basins at Grade III or above level shall reach 75 per cent or above
  • Black and odorous water bodies in urban built-up areas are generally eliminated
  • The proportion of urban centralise drinking water source at Grade III or above shall reach around 95 per cent.

China’s Sponge City Initiative

Rapid urbanisation, poor water management and drainage are large issues in China. More than 230 cities were affected by flooding in 2013. With cities getting bigger and climate change threatening to bring more extreme weather, China has embarked on the ‘sponge city’ initiative.

A sponge city is a city that acts as a sponge with an urban environment planned and constructed to soak up almost every raindrop and capture that water for reuse. Instead of funnelling rainwater away, a sponge city retains it for use within its own boundaries. The recycled water can be used to recharge depleted aquifers, and irrigate gardens and urban farms. When properly treated, the recycled water can replace drinking water, flush toilets or clean homes.

The concept of a sponge city is quite similar to the United States’ Low Impact Development (LID), the United Kingdom’s Sustainable Drainage Systems (SuDS) and Australia’s Water Sensitive Urban Design (WSUD). The Chinese interpretation requires redesigning and retrofitting existing urban areas, and designing new urban areas to better capture, clean and reuse water. It requires new equipment, technologies and international collaboration to implement successfully.

Cities in China have become more conscious about rainfall levels and their local environment in general. Rainfall is commonly unsafe to drink due to air pollutants; it can also become more contaminated due to poor drainage infrastructure, pollution run-off and sewerage system overflow.

The Chinese Government’s 13th Five-Year Plan 2016-2020 highlighted water conservation as its first priority in the nation’s built infrastructure network. It emphasised that water resource management, water ecology remediation and water environment protection will be the most important element of infrastructure construction.

To implement the plan, the Ministry of Housing and Urban Rural Development (MOHURD), and Ministries of Finance and Water released the ‘Construction Guideline for Sponge City’ at the end of 2014. The program is partially funded by the Ministry of Finance. The sponge city initiative aims to maximise water retainment and minimise the effects of drought and flooding by recycling and efficiently applying water supplies and reserves. It will strengthen urban planning and construction management, and use buildings, roads, green spaces and other ecosystems to absorb rainwater, increase reservoir permeability and effectively control stormwater run-off for storage and reuse in urban settings.

Further information on sponge cities is available (in Chinese).

Opportunities

Technical cooperation and joint ventures are of most interest to local environmental companies. The environmental protection industry in China is seeing significant opportunities and market potential as the Chinese Government gives the environment a higher priority in its strategic plan. The Chinese Government is aware that it must act and recognises the need to attract international technology and know-how. Key opportunities for Australian industry exist in the following areas:

  • remediation of polluted lakes, rivers and other water bodies
  • industrial and urban waste water treatment solutions
  • real-time pollution data monitoring and environmental impact assessment tools
  • water recycling, efficiency, and conservation for both industrial and urban use
  • water quality management
  • ground water management and reuse
  • river basin and wetland management
  • integrated water planning
  • financing model expertise for waste water treatment (PPP) and environmental sustainability.

As well as seeking ready-made commercial solutions in the above areas the Chinese government and industry are also keen to collaborate with Australian institutions in scientific research and technical transfers to enhance Chinese industry capacity.

Competitive environment

China is working towards a market-driven environment. However, the government plays a key role in various projects. There are a large number of players in this industry, including State-Owned-Enterprises (SOEs), private companies, research institutes and engineering companies. International companies are also pursuing opportunities in this sector.

Tariffs, regulations and customs

Duties are imposed on the majority of imports to China. Tariff rates vary according to the type of material, the components and the intended use of the product.

Value Added Tax of 17 per cent is applied to all imports, except those specifically used in manufacturing for re-export. Low tariff rates are applied to certain products in sectors where the government encourages development e.g. hi-tech and energy saving products.

Potential exporters are advised to make direct contact with Austrade in order to obtain the most up-to-date information on the relevant sector tariffs and regulations.

The China Australia Free Trade Agreement (ChAFTA), when it comes into effect, will enhance market access for environmental service companies, as well as eliminating tariffs on environmental equipment imported from Australia.

Industry standards

The Standardization Administration of China and National Accreditation Centre for Environmental Conformity Assessment issue and monitor the relevant standards in China.

Marketing your products and services

Market entry

There are a range of options for entering the China environment sector:

  • establishing long-term relationships with local companies who can recommend your products to end users
  • appointing distributors or agents
  • establishing joint-ventures with local companies
  • acquiring local companies who are in the business and have a track record
  • linking up with local or international companies with an established presence in the market to co-bid for projects
  • approaching customers and selling products directly
  • attending bidding directly for consulting service projects or projects with services to be procured directly by international funding organisations such as the World Bank and the Asian Development Bank.

Prepare yourself for the market by undertaking a range of market research, business development and promotional activities. Commission a market assessment by local experts for your products and services and visit the market regularly to build your business. The promotional aspects of your marketing strategy will be critical to success:

  • develop a Chinese language product introduction or company profile
  • organise commercial and technical seminars
  • engage local staff to promote your business if you are looking at a long-term strategy
  • participate in industry specific tradeshows
  • provide promotional, technical and service support to distributors and customers.

Online trading is not commonly used in the environmental protection industry in China. Environmental protection projects and product procurements are published on websites of central and local environmental government authorities and industrial associations. However, early engagement (before the project is fully developed) is essential.

Having a local presence in the market, through the establishment of an office, working with a partner in China or regular visits from Australia is fundamental to working effectively. Approaching the market with a long term strategy is also important.

Austrade can help you with most of the above items, including advising you on your market entry and market development strategy.

Distribution channels

Distribution channels vary depending on products and services. Products are commonly imported into China and distributed through local agents or distributors. The number of companies registered to import and export products is controlled, however, end users, local agents or distributors who do not have an import licence can import through a trading company that does.

As China is a large country with varying levels of economic development across its regions, it is not recommended that you limit yourself to a single distributor. Multiple distributors and agents with geographically exclusive areas may be more effective.

Links and industry contacts

Environmental–related resources

China Association of Environmental Protection Industry
China Environment (Chinese)
China Environmental Industry Network
Cleaner Production in China
Institute of Environment and Development

Government, business and trade resources for China

Chinese Ministry of Environmental Protection
Chinese Ministry of Water Resources
Chinese National Development of Reform Commission

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

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