Environment and water management to China

Market Trends

Environmental remediation

After several decades of rapid economic growth and urbanisation, China faces a range of environmental challenges around the remediation and ongoing management of water and soil pollution, as well as challenges maintaining acceptable air quality.

Statistics from the Chinese Government highlight the scale of the problem. With 6 per cent of the world’s fresh water and 19 per cent of the world’s population, China faces a situation whereby 60 per cent of groundwater is severely contaminated and unsuitable for both agricultural and human use (Source: Chinese Ministry of Land and Resources, 2015).

According to the Ministry of Environmental Protection and the Ministry of Land and Resources (2014), 19 per cent of arable land is contaminated by heavy metals.

As China’s per capita income continues to rise, the demand for better environmental outcomes and a more sustainable approach to economic development has led the Chinese Government to adopt a number of important reforms.

China’s 13th 5 Year Plan, a high-level blue print for China’s development from 2016 to 2020, emphasised environmental issues with dedicated chapters on the conservation of resources, improving China’s ecological environment and strengthening remediation efforts.

In addition, China’s State Council has released three action plans aimed at tackling water, soil and air pollution:

The action plans lay out a series of ambitious pollution reduction targets, encourages the use of market mechanisms and new technologies and promises greater supervision and enforcement of regulations.

A revision of the Environmental Law came into force on 1 January 2015. This revision makes it one of the strictest environmental laws in Chinese history because 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 reflect the Chinese Government’s commitment to improve its seriously damaged environment, and are reflected in national, provincial and local government budgets for the implementation of environmental remediation measures and projects.

Action Plan for Water

The Water Action Plan covers 7 key river basins, 36 major cities, more than 4,000 underground water monitoring points and 9 river estuaries.

Through a joint central and provincial government initiative, the Ministry of Environmental Protection (MEP) has established a water project database. In August 2016, the MEP and the Ministry of Finance (MOF) announced that over 4,800 projects with an estimated investment of RMB430 billion (A$86 billion) have been listed in the database and are eligible for central government funding. The MOF has recently allocated RMB13 billion (A$2.6 billion) from the central budget to support projects from this central project database.

To lessen the reliance on government funding sources, the Chinese government and research institutions are investigating alternate project funding models, such as public-private partnerships and green bonds, to further open up the environmental industry to sources of private capital.

Examples of water-related projects underway around China include river basin pollution prevention (82 cities), lake and river pollution prevention and remediation (49 cities), and groundwater pollution prevention and remediation (19 cities).


China is experiencing rapid growth in demand for environmental products and services. While the bulk of this demand is met by China’s domestic industry, there are specific areas where technology levels are low and below international standards.

Sub-sectors identified with Australian comparative advantage include:

  • Remediation technologies for polluted lakes, rivers and other water bodies
  • industrial wastewater treatment solutions
  • soil remediation
  • zero liquid discharge technologies
  • environmental testing and monitoring technologies
  • river basin management
  • integrated water planning
  • water efficiency

Chinese Government and industry have displayed interest in collaborating with Australian institutions in scientific research and technical transfers to enhance Chinese industry capacity.

Competitive Environment

With one of the fastest growth rates for any sector in China, ever greater numbers of domestic and international entrants are seeking opportunities in environmental protection and remediation.

Some progress has been made towards a market-led approach, however government still plays a key role in most projects. Major players include state-owned enterprises (SOEs), private companies, research institutes and engineering companies.

Key challenges for Australian companies include:

  • competition from local and international companies
  • sometimes opaque procurement processes
  • diverse markets and sub-sectors across China
  • intellectual property protection (see IP Australia’s IP Protection in China for more information)
  • ongoing relationship management with clients and stakeholders in the project
  • China’s business environment.

Market Entry

There are several common approaches for Australian companies seeking to enter the Chinese water market, including:

  • appointing in-market distributors or agents
  • setting up wholly-owned foreign entity or representative office in China and engaging local staff
  • co-bid for projects in China with local or international companies with an existing market presence
  • participate in tenders from international organisations such as the World Bank

Australian water companies interested in opportunities in China should consider the following strategies to market entry and ongoing opportunity identification:

  • Develop Chinese language marketing materials that clearly demonstrate the environmental and financial benefits of the technology or service.
  • Consider technical seminars and trade shows as avenues to build connections with key decision makers, understand emerging market trends and communicate complex value propositions.
  • Understand the project pipeline relevant to your industry, as early engagement with a project proponent is often important.
  • Provide ongoing promotional, technical and service support to distributors and customers.
  • Maintain a local presence either through frequent visits to the market, an in-country office or through a Chinese partner.

Austrade can provide further advice on these strategies.

Austrade’s 3iPET Initiative

Austrade’s Infrastructure and Energy team is supporting a platform to introduce capable Australian firms to environmental 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.

Industry Standards

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

Tariffs, regulations and customs

A Value Added Tax (VAT) of 17 per cent is applied to all imports, except to those specifically used in manufacturing for re-export. Low tariff rates are applied to certain products in sectors where the government encourages development.

The implementation of the China Australia Free Trade Agreement (ChAFTA) is reducing and eliminating tariffs on Australia’s environmental exports and reducing barriers to business for services providers. Fact sheets and the full text of the agreement can be found on the Department of Foreign Affairs and Trade website , and a Free Trade Agreement Portal allows companies to search for products by name of Harmonized System (HS) code to determine the preferential tariff rate.

Links and industry contacts

Chinese Government departments and agencies:

Foreign Economic Cooperation Office under the Chinese Ministry of Environmental Protection
Chinese Ministry of Environmental Protection
Chinese Ministry of Water Resources
Chinese National Development and Reform Commission

Chinese industry associations:

China Association of Environmental Protection Industry
China Environment Chamber of Commerce
China Urban Water Association
China Water Enterprises Confederation

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.

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