China spent just under US $10 billion on environmental protection in 1999, a 15% increase over 1998.
China plans to spend US $85 billion to meet environmental goals in its 10th Five-Year Plan (2001-2005).
Central government contribution: US $9.7 billion.
Provincial and local government contribution: US $29 billion.
Business enterprise contribution: US $46 billion. Estimates calculated by Chinese Research Academy of Environmental Sciences (CRAES) in November, 2000.
Beijing will spend at least $5.4 billion on environmental clean-up to host the 2008 Olympics.
Water quality – 50% of China’s major cities and towns do not meet drinking standards; northern China is plagued by severe water shortages, southern China by flooding. Monitoring technologies are needed for resource management.
Air quality – pollutants remain a formidable concern for China’s environment and many are not monitored.
Waste management – Only 5% of household and 17% of industrial waste receive treatment. Hazardous waste is often incinerated and disposed of improperly. An adequate market-based management system does not yet exist.
Inexpensive, profitability-enhancing resource recovery solutions – environmental needs are huge, but money is scarce.
Innovative and cleaner production methods to minimize pollution fees and harm to the environment.
Management skills and best practices training to improve equipment and overall environmental performance.
Environment is a top priority: Firm government resolve to develop short and long-term pollution plans. Increased citizen awareness and demand for better services. Liberalization of trade on environmental goods and services. New laws and strengthened environmental enforcement.
IMPEDIMENTS TO TRADE
Difficult to enter Chinese market.
Need to develop personal relationships and/or pay a service provider with connections.
Exports must be exceptional products brokered through a reliable local representative or sold indirectly through multilateral projects, foreign funded investment schemes, or by targeting demands of foreign invested companies in China. Best option is to establish a joint venture or a wholly foreign owned enterprise.
US competitiveness is severely limited by the lack of a bilateral assistance program. Foreign competitors simultaneously act as development consultants to the Chinese and lay the groundwork to win large contracts. European, Japanese, Canadian, and Australian competitors tie large sums of multilateral-sourced funding to companies in their country by entering into co-financing operations, offering low-interest “soft” loans, and/or providing local Chinese authorities with free technology demonstrations and facilities. These government-supported tactics and the comparatively larger size of their environmental companies erode US market share.
KEY MARKET ACCESS STRATEGIES
Monitor enforcement trends and priority government projects and goals: South-North Water Project, Western Development Strategy, ADB projects, TDA feasibility grants, and DOC market reports and trade events. Monitor China’s accession to the World Trade Organization: tariff reductions and key industry sectors will shift. Understand China’s business culture and adapt products to the market needs. Consult informational services of the US Department of Commerce’s Environmental Technologies Industries (ETI) office and the US & Foreign Commercial Service (US&FCS) network at home and abroad.
Susan Simon, International Trade Specialist Phone: 202-482-0713 Fax: 202-501-7909 Email: Susan.Simon@mail.doc.gov WebSites:www.environment.ita.doc.gov and www.usembassy-china.org.cn