As the speed and scale of China's rise as an economic power has no clear parallel in history, so its pollution problem has became the major issue for the entire country. According to the World Bank, 16 cities in the world with the worst air pollution are located in China. Today, more than 70% of the water that flows through China's urban areas is unfit for drinking or fishing. The water pollution reduces crop returns; air pollution is blamed for the premature death of some 400,000 Chinese annually; solid waste production is expected to more than double over the next decade, pushing China ahead of the USA.

Market overview

As pollution and environmental degradation in China worsens, the Chinese government has committed official investment of $219 billion US in major coastal cities to reduce the pollution issue in a five-year plan (2005~2010). With a budget of $450 billion US, the new national five-year plan (2010-2015) aims to reduce carbon intensity - carbon emissions/unit GDP - up to 45 percent by 2020, when 15 percent of its energy use will be non-fossil fuel. It also aims to reverse deforestation by increasing the total forest cover by 40 hectares and increasing the total forest stock volume by 1.3 billion m3. The plan will set specific targets for different economic regions of China and will become domestic law. Chinese firms will be legally required to meet the emission reduction targets. Some experts estimate that environmental degradation currently costs the Chinese economy up to 8 percent of its GDP, so the plan, though painful to firms, is undoubtedly beneficial for China's long-term economic growth.

Opportunity for Canadian Exporters

China's environmental market is highly competitive, somewhat restricted, unwieldly, and not easily understood. The intricacies of how to address problems efficiently are not well understood by the domestic players, making it difficult for outsiders to determine where their services are needed and how access can be achieved. Today China is actively looking to foreign solutions to assist its infant-stage environmental industry. With advanced technology, facilities and capacity, Canadian companies and research organizations have the ability to assess their potential to do business in Chinese export market.

Canadian businesses must understand the unique China market characteristic

Locality to locality - It is critical that Canadian business thinks not about the market as a whole but about the market climate of a particular region or locality in which they be pursue business ventures.

Bottom-up - Doing business in the Chinese environmental market is best facilitated through a "bottom-up" approach, meaning that Canadian business should establish a preliminary relationship with local purchasers, partners or government bodies as opposed to national-level ministries.

Stick with policies - The Chinese government is the major purchaser of environmental technologies and equipment. The policies clearly expound environmental development priorities through initiatives such as the "five year plan". These policies are good indicators regarding central priorities and export opportunities.