The speed and scale of China's rise as an economic power has no parallel in history, equally unparalleled is the scale of the pollution problem which threatens its economic growth. According to the World Bank, 16 Chinese cities are in their list as having the worst air pollution. 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 in this unsettling trend.

Market overview

As pollution and environmental degradation in China worsens, the Chinese government committed an investment of $219 billion US in major coastal cities. With a budget of $450 billion US, the new national five-year national 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 that 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 necessary for China's long-term economic growth.

Opportunity for Canadian Exporters

China's environmental market is highly competitive, somewhat restricted, unwieldy and not easily understood. The intricacies of how to address these problems efficiently are not well understood by foreign companies, making it difficult for outsiders to determine what services are needed or how access can be granted. Today China is actively looking to foreign solutions to assist its early-stage environmental industry. With advanced technology, facilities and capacity, Canadian companies and research organizations have the ability to make great inroads in the Chinese export market for environmental products and services.

Canadian businesses must understand the unique China market characteristic

Local is better - For environmental products and services, it is preferable that Canadian businesses focus on localized markets in China, either in a particular region or city, in order to pursue business ventures.

Bottom-up - Doing business in the Chinese environmental market is best facilitated through a "bottom-up" approach. Canadian businesses should establish a preliminary relationship with local purchasers, partners or government bodies and only then approach 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 of national priorities and are a guidebook for export opportunities.