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Overview of China’s Clean Technology Market

China has fully embraced clean technology and become the world’s largest producer and consumer. The country’s current investment in clean technology has exceeded the total investment in Europe and the United States.

Chinese government has consistently demonstrated its willingness to invest heavily in green industries to resolve its pollution problem and support green industries with investment incentives and preferential policies to foster both domestic cleantech market as well as attract overseas investors.

According to a recent report from PWC, in 2016 clean technology investment in China has reached 1,850 billion RMB (around 26.9 billion USD), which is almost 2.5% of the country’s GDP. It is estimated that China’s total investment in clean technology will amount to 17,000 billion RMB in 2020.

YearChina total investment in clean technology (billion RMB)
2007350
2008500
2009530
2010770
2011720
2012830
2013910
2014970
20151,080
20161,850

* Source: PWC “Market Opportunities for Clean Technology in China”

Invest in China’s clean technology subsectors

The Business and Sustainable Development Commission (BSC) recently reported that businesses stand to gain a combined US$2.3 trillion from solving China’s various environmental issues. These opportunities are not evenly spread across every green industry, however.

Data from one PWC research report shows that from 2013 to 2016, the investment in the three subsectors including solid waste treatment, water pollution control and air pollution control accounted for 70% of total investment and the investment in the two subsectors including environmental monitoring and energy efficiency accounted for 20% of total investment.

Investment in soil remediation has not yet been scaled up but will grow rapidly and be in high demand soon due to the impact of the China recently released Soil Pollution Prevention and Control Action Plan.

Investment transactions in China’s cleantech subsectors from 2013 to 2016*
Clean technology subsectorsScale of transactions (million RMB)Number of transactions
Solid waste treatment5336103
Water pollution control264560
Air pollution control151294
Environmental monitoring125618
Energy efficiency123358
Biomass71227
Geothermal energy5845
New energy electronic vehicle5542
Soil remediation54810
Hydrothermal and ocean energy5161
Hydropower1901
Noise prevention1018
Carbon Capture and Storage7213
Aerodynamics00

* Source: PWC “Market Opportunities for Clean Technology in China”

Regulations, policies and plans that impact on clean technology in China*

Clean technology subsectorsRegulations, policies and plans issued by China governmentEnforcement intensity
Air pollution control
  • Air Pollution Prevention and Control Action Plan
  • Volatile Organics Emissions Levy Rules
  • Work plan on full implementation of ultra-low emission and energy-saving transformation for coal-fired power plants
High
Water pollution control
  • Water Pollution Prevention and Control Action Plan
  • Sponge City
High
Soil remediation
  • Soil Pollution Prevention and Control Action Plan
High
Solid waste treatment
  • Medium and long-term planning for renewable resource recycling system (2015-2020)
  • Guidelines for promoting solid waste treatment in rural areas
High
New energy electric vehicle
  • Electric Vehicle Charging Infrastructure Development Guide
Medium-high
Biomass
  • Energy Industry Guide 2016
Medium-high
Carbon Capture and Storage
  • Notice on Starting the National Carbon Emissions Trading Market
Medium-high
Energy efficiency
  • Industrial Energy Conservation Supervision Work Plan
Medium
Geothermal energy
  • Energy Industry Guide 2016
Medium
Hydrothermal and ocean energy
  • Marine Renewable Energy Development Outline (2013-2016)
  • Transparent Ocean
Medium
Hydropower
  • Energy Industry Guide 2016
Medium

* Source: PWC “Market Opportunities for Clean Technology in China”

Solid waste treatment and water pollution control

Solid waste treatment and water pollution control are the two largest areas in the environmental protection industry and attract the most attention. They are the main growth areas in the field of environmental protection.

According to a research report of LCEGS (Low Carbon Environment Goods and Services), in 2016 solid waste treatment and water pollution control accounted for 85% in total and 49.1% and 35.6% respectively of the global environmental protection industry market. Compared to the international market scale, market in China for solid waste treatment and water pollution control still have large potential to expand.

Energy efficiency

China’s 13th Five-Year Plan, (covering the years from 2016 to 2020), for the first time, classified energy efficiency as an independent subsector under environmental protection industry. Attaching significant importance to energy efficiency, the 13th Five-Year Plan sets the target of achieving 3 trillion RMB market size in this subsector by 2020. As an emerging whereas strategically important subsector, energy efficiency market in China is deemed to expand considerably and continuously.

Solar and wind power

China is the biggest producer of solar and wind power energy. Under China’s 13th Five Year Plan China aims to have 110 gigawatts of solar capacity and 250 gigawatts of wind power capacity installed by 2020. China has encouraged foreign investment in solar and wind technology to help the country reach its ambitious capacity targets. There are variety of incentives in place, such as reduced corporate income tax (CIT) rates for installing wind power in the country’s western regions.

Given that Chinese domestic manufactures are well developed and positioned on the market, foreign companies should compete with advantages in technology, efficiency, and expertise, making them attractive for joint ventures with Chinese partners or allowing them to sell directly to private entities. There are also opportunities for foreign investors in associated fields, such as power grids. Much of the clean energy China produces is lost to curtailment, due in large part to outdated power grids. At least 17 percent of China’s wind energy was lost to curtailment in 2016, including 43 percent in Gansu province and 38 percent in Xinjiang. Foreign expertise in the development of smart grids – electric grids that use big data and advanced technology to more reliably and efficiently deliver electricity – is needed for China to capture the clean energy it creates

Electric Vehicles

In recent years, China's new energy vehicle manufacturing industry has experienced rapid growth in market scale. According to China Automobile Manufacturer Association, 794,000 electronic vehicles were produced and 777,000 were sold in China in the year of 2017, a year-on-year increase of 53.8% and 53.3% respectively. China Automobile Manufacturer Association estimates that the new energy vehicle manufacturing will grow steadily at a high rate and account for 15% of market share by 2025.

However, the new energy vehicle market is highly protective in China. Domestic companies make up 93 percent of electric vehicle sales, while Tesla controls six percent, leaving just one percent for the rest.

China and Canada Cooperation in Clean Technology

Canada’s exports of renewable energy and energy infrastructure goods to China totaled 202.3 million Canadian dollars in 2014.

In February 2016 Canada and China signed a joint declaration on clean technology cooperation to enforce the shared objectives of promoting the cooperation of the two countries’ clean technology development. The joint declaration highlights that Canada and China share best practices to determine policy approaches to clean technology, address economic and social challenges through clean technology, explore the possibility of clean energy technology demonstrations and facilitate collaboration between small and medium-sized enterprises.

In December of 2017, Canada and China issued Joint Statement on Climate Change and Clean Growth and reinforced the bilateral collaboration on clean technology development.

Best-selling Products and Trade Opportunities

Still at an early stage of development, China’s clean technology market presents Canada exporters with significant trade opportunities. In China, equipment produced for environmental protection is mainly for the purpose of prevention and treatment of water and air pollution. The environmental services offered in China are largely in the areas of the design and construction of environmental engineering projects, and the operation of treatment facilities. If China is to meet its target of controlling pollution and saving energy in the coming decades, it will need to acquire a number of key technologies in the sectors of sewage treatment (in particular solid waste recycling), environmental monitoring, and integrated utilization of waste resources. However, China has yet to master these core technologies and is still relying on high-tech equipment/technologies imported from foreign countries.

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