A Good Environment – for Business

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China’s industrial development has been good for business, but not for the environment. However, it may be good for the environmental business, according to recent reports on wastewater, environmental impact assessments and recycling.

Examples of environmental problems abound (see here for just one of them “Dirty Business in Harbin”), and many are related to China’s strained water supply. The FT notes a “desperate need for investment in infrastructure for modern water treatment and leading-edge environmental technology….According to a study of some 600 Chinese cities by the ministry of construction, about 38 per cent of these cities do not have sufficient wastewater treatment networks.”

It is estimated that US$10.4 billion needs to be invested in municipal wastewater treatment alone over the next 5 years, presenting an attractive opportunity for the foreign firms that design, build and manage such facilities. Companies active in the market are reported to include:

    • Veolia Water (France): Has a partnership with a subsidiary of Sinopec for treatment of industrial wastewater
    • Suez (France): Plans to double China revenues to US$1.3 billion by 2008, and is finding good markets in China’s second-tier cities.
    • Hyflux (Singapore): Half of its revenues are from China already, with a focus on water-treatment plansts for the petrochemical and electronics industries

But the environment meets business in many places, and there are moves by the regulator, the State Environmental Protection Administration (SEPA), to improve environmental impact assessments in construction projects. SEPA director, Zhou Shengxian, is quoted in China Daily as saying:

    “environmental impact assessments will set the standard and no development project which damages the environment will get approved…”Some areas have disregarded the public’s living environment and launched development projects in a blind and chaotic way…A number of projects that have produced serious pollution and damaged the ecology have even been cited as image projects.”

The paper also reports that:

    “China has 68 organizations specializing in environmental impact assessments…Environmental protection officials had evaluated 55,000 construction projects in the last two years, and had denied approval of 1,190 projects, with investments totaling 170 billion yuan (US$20.96 billion) for failing to meet environmental protection standards.”

Another report, in the People’s Daily, continues with the environmental theme, and notes that “China’s first recycling economy law is expected to be submitted to the National People’s Congress (NPC) Standing Committee for deliberation in August next year”, and that “the law will be hopefully issued by the end of 2007.”

These reports follow bold targets in the 11th Five Year plan (see here), and commitments (reported by the BBC) to cut energy use by a fifth, reduce industrial pollution by 10 percent, and water consumption be factories by nearly one third.

As China is already home to seven of the top ten polluted cities in the world, according to the World Health Organisation (WHO) – and has a rapidly emerging consumer society on a grand scale – these moves are clearly important. However the speed and scope of implementation required to make an impact will doubtless be a challenge. The recent tax on disposable chopsticks is perhaps the type of measure that will have mass application and a big impact (1.3 million cubic meters of timber a year!), but it is only a start.

In any event, the business opportunity is clear (even if the air is not). Last year the Environmental Business Journal reported that in addition to the US$12 billion Olympics clean-up for Beijing, the U.S. Department of Commerce’s Office of Energy and Environmental Industries (OEEI) estimates that the environmental market in China, including goods and services, was about US$32 billion in 2005.

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2 Responses to “A Good Environment – for Business”

  1. Archive » All About the Environment| China Business Blog Says:

    […] #038; Law I posted the other day about the environmental business in China (“A Good Environment – for Business”). Now a detailed report on environmental protection over th […]

  2. Archive » Where Is All The Water?| China Business Blog Says:

    […] ge treatment facilities between 2006 and 2010, and I have noted before that there are some good business opportunities for international environmental companies that are fast moving into […]

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