China's acute environmental problems stem from a deteriorating natural resource base, dense population, heavy reliance on coal, outmoded technology, underpriced water and energy, and breakneck industrial growth. In response to this situation, the government has unleashed a burst of environmental legislation, shut down thousands of small, dirty factories, and decreed by 2010 the country will reduce its total pollution discharge by 10% from the 2005 level and reduce energy consumption by 20% per GDP unit. It is estimated that in the coming five years, China will invest 175 billion USD in environmental protection, accounting for 1.3-1.4% of GDP. Progress has been made gradually. According to the statics released by Ministry of Environmental Protection on June 5, 2008, by the end of 2007, 48% of coal-fired power units had been installed with desulfurization systems, compared with only 12% in 2005. Municipal wastewater treatment rate had reached to 60% as of late 2007. In 2007, Chemical Oxygen Demand (COD) were reduced by 3.14% and SO2 by 4.66% from the 2006 level. In early 2008, State Environmental Protection Administration (Chinese EPA) was upgraded into a Ministry-level agency – Ministry of Environmental Protection, a solid evidence of China’s resolution to step up efforts in environment cleanup.

There are enormous opportunities in the environmental protection market in China. Some best prospects in this field are listed as follows:

Municipal and industry wastewater treatment technology (sludge, auto-control)
Hazardous waste and medical waste treatment technology
Waste-to-Energy technologies
De-SOx and De-NOx technologies
Air and water monitoring equipment

Solid Waste:
The Chinese solid waste treatment market holds tremendous opportunities for U.S. equipment and service providers. Despite China’s position as the world largest municipal solid waste (MSW) generator, China’s solid waste treatment rate remains very low. Among the 661 cities throughout the country, 334 cities do not have any MSW treatment facilities. To tackle this problem, the Chinese government unveiled aggressive plans to improve the solid waste treatment rate. According to the plans, from 2006-2010, China will invest 111.5billion RMB (USD14.9billion) in building fixed asset MSW treatment facilities, and will seek to raise non-harmful treatment rate of MSW to no lower than 60% by 2010. On the industrial waste side, China will maintain the policy of “reducing and recycling.” As for hazardous waste treatment, the country is allocating 14.92 billion RMB (1.99 billion USD) to build 31 hazardous waste treatment centers, 300 centralized disposal facilities for medical waste and 31 warehouses for radioactive waste in the next three years. China is also currently considering updating their regulations for soil remediation and remediation of heavy metals. Therefore, good potential market opportunities exist for American suppliers. Despite fierce domestic and third-country competition, U.S. equipment and service suppliers enjoy a good reputation by Chinese buyers because of the high-quality products and services provided by American companies.

Water:
China’s water situation has been an important issue on two fronts - water pollution and water availability. One third of China’s river courses, lakes, and coastal areas are severely contaminated as a result of municipal, industrial and agricultural discharges. Over 17,000 counties and towns have no wastewater treatment plants, and nearly 300 million people are currently drinking contaminated water. In addition, China has very low water resources per capita (one quarter of the world average), and they are unevenly distributed (e.g. one tenth in northern and western areas). In 2006, 420 out of 669 cities suffered from water scarcity.

China continues to face severe water pollution and water scarcity problems. China generated 53.7 billion tons of wastewater; municipal wastewater and industrial wastewater account for 55% and 45% respectively. It is expected that total wastewater will continue growing due to rapid urbanization and industrialization, to reach 64 billion tons in 2010. The current wastewater treatment infrastructure is inadequate, and there will be continued construction of new facilities and upgrading of existing ones, resulting in a large demand for related technology and equipment. However, competition for projects is also fierce, both from foreign suppliers that can provide good technology, as well as from domestic suppliers that can offer competitive prices.

In the 11th Five-Year Plan, two major targets set by the central government are constructing a water-saving society and treating water pollution. It aims to provide safe drinking water to 100 million residents, and treat 70% of sewage. In order to meet the goals, 1,000 new WWTPs (representing investment of RMB 330 billion) will be constructed, raising total daily treatment capacity to 10,000 tons. China will begin to levy sewage treatment fees throughout the country in the coming five years, with aims to decrease the total volume of primary pollutants by 10% by 2010.

Air:
According to the statistics released on June 5, 2008 by Chinese Ministry of Environmental Protection, as of early 2008, 39.5% of the cities in China do not meet the national standard II of air quality. 28% cities are below the national particulate matters standard and 20.9% below the national SO2 standard. Among the 500 cities monitored, 281 cities suffered from acid rain, accounting for 56.2% of the total. 171 cities monitored had as frequent as 25% acid rain last year. And 75% of rain is acid rain last year in another 65 cities.

Responding to this serious situation, the government required that by 2010, desulfurization devices should be installed on coal-fired boilers at power plants where medium or high sulfur coal is used. All newly built, expanded or renovated coal-fired power plants must include installation of desulfurization equipment. It is estimated that the market value of the desulfurization industry will be US$ 725 million if only 5% of all the large-sized coal-fired power plants install desulfurization equipment.

As the government comes to realize the imperativeness of De-NOx of Power Plants Flue Gas, U.S. De-NOx technology and equipment providers will find great market potential in China in the next 5-10 years. Experts predict the market will be booming in late “11th-five year plan (2006-2010)” and entire 12th-five year plan (2011-2015), “ as regulations and laws are established gradually and systematically.

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