Environment and water management to China
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.
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 six 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 Five-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 seven key river basins, 36 major cities, more than 4,000 underground water monitoring points and nine 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’s Sponge City initiative
Rapid urbanisation, poor water management and inadequate drainage systems are large and ongoing challenges in many parts of China. According to the State Council’s Development and Reform Commission, around 180 Chinese cities were affected annually by flooding from 2013 to 2015. Chinese President Xi Jin Ping proposed the idea of a “Sponge City” at the Central Urban and Rural Working Conference in December 2013.
A sponge city is a city that acts as a sponge with an urban environment planned and constructed to soak up rainfall and capture the 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, irrigate gardens and urban farms or feed back into natural waterways. When properly treated, the recycled water can replace freshwater supplies and improve environmental outcomes.
Investing in the construction of sponge cities has since become a priority for the Chinese Government. The Central Government will allocate each pilot city RMB400-600 million to build sponge city related infrastructure for three years. Provincial and local governments have also committed funds.
While central government departments (Ministry of Finance, Ministry of Housing and Ministry of Water Resources) are jointly responsible for implementing the plan, provincial and city governments play a key role in project delivery.
Major sponge city projects aim to:
- improve drainage and stormwater management
- increase water absorption capacity in urban areas
- retain, store, purify and reuse rainwater
- construct demonstration projects around commercial and residential real estate, roads, parks and green spaces.
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
- zero liquid discharge technologies
- environmental testing and monitoring technologies
- river basin management
- integrated water planning
- water efficiency
- non-revenue water management.
Chinese Government and industry have displayed interest in collaborating with Australian institutions in scientific research and technical transfers to enhance Chinese industry capacity.
Austrade’s 3iPET Initiative
Austrade’s 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 water capability documents that have been 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’s Business Development Managers working on-the-ground in China. These managers provide services ranging from cultural awareness to business matching.
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.
China is working towards a market-driven environment, 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 Austrade’s Protecting intellectual property rights in China: an introductory guide for more information)
- ongoing relationship management with clients and stakeholders in the project
- China’s business environment.
There are several common approaches for Australian companies seeking to enter the Chinese water market, including:
- establishing partnerships with Chinese firms
- 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, Asian Development Bank or the Asian Infrastructure Investment 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 essential.
- 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 advise on these strategies.
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
Austrade China team has also prepared a list of key third party events (not organised by Austrade) held in China in the environment and water space for your reference. These are not necessarily the events in which Austrade will participate. It is up to companies’ own discretion to attend, based on their company strategies. For more information please visit the organiser’s website. The content is for information and carries no warranty.
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.
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: firstname.lastname@example.org
A list of Austrade offices (in alphabetical order of country) is also available.