Foreseeing 2019: Panorama of China's Wastewater Treatment Industry in 2019


China has long been short of water resources, serious water pollution problems, at the same time high wastewater discharge, the water environment needs to be improved.

In recent years, with the country's increasing emphasis on environmental protection, a series of supportive policies, such as the Water Ten and the 13th Five-Year Plan, have brought broad market space to the sewage treatment industry.
In the next few years, under the background of further standardization of PPP model and continuous increase of special actions, "clear water battle" and the holding of environmental protection conference, the market demand of sewage treatment will be released at an accelerated pace, and the industry has great potential for development.


Overview of sewage treatment industry chain and process


The industrial chain is an objective form of link-type relation formed between various industrial departments based on certain technical and economic relations and on specific logical relations and spatial and temporal layout relations.
In the industrial chain, there is a large number of upstream and downstream relations and the exchange of mutual value. The upstream links deliver products or services to the downstream links, and the downstream links feed back information to the upstream links.
The industrial chain of China's sewage treatment industry includes upstream sewage treatment scientific research, planning and design, midstream sewage treatment equipment manufacturing, procurement and engineering construction, and downstream operation, management, supervision and maintenance.


Looking back at the development of sewage treatment in China, in the 1960s and 1970s, China began to invest in a number of sewage treatment facilities and sewage treatment plants.
Under the planned economy system, sewage treatment plants are all state-owned institutions with poor operational capacity, most of them are first-level treatment plants, and there is a severe shortage of professionals in the operation of sewage treatment plants.
Since 2002, urban sewage treatment in China has developed rapidly both in quantity and quality.
The ministry of construction has successively issued a series of relevant documents, providing clear policy expectations and legal guarantees for domestic and foreign investors, and providing codes of conduct for various subjects in the urban sewage treatment market.
China's market-oriented reform of sewage treatment is making progress in exploration. Since 2014, the PPP model of sewage treatment industry has gradually emerged. Based on "benefit sharing, risk sharing and long-term cooperation", this model promotes the infrastructure construction of sewage treatment facilities by the government and companies.


Per capita water resources are scarce, and water pollution is a serious problem
China's water shortage problem is serious.
According to a report released by the ministry of water resources, China's total water resources were 2796 billion cubic meters by the end of 2018, with per capita water resources of 2004 cubic meters per person, only a quarter of the world average, and one of the 13 poor water countries in the United Nations.


Sewage discharge huge, domestic sewage into the main source
With the continuous development of China's economy, people's living standards are improving day by day, and domestic water consumption continues to increase.
In recent years, China's total water consumption has basically maintained a stable level, changing from 609.5 billion cubic meters in 2014 to 611 billion cubic meters in 2018.
At the same time, industrial and agricultural water use as the most important way of water consumption in the last five years of water use is slowly decreasing.
Domestic water consumption, on the other hand, has been increasing year by year in recent years, from 76.8 billion cubic meters in 2014 to 85 billion cubic meters in 2018.


Strong policy support, processing capacity continued to strengthen

In recent years, the government has attached increasing importance to environmental protection and introduced many supportive policies, which will undoubtedly be particularly beneficial to the development of the environmental protection industry.
As an important aspect of environmental protection, water pollution control has also been attached great importance by the government. A series of documents, including the action plan for the prevention and control of water pollution and the opinions on comprehensively strengthening ecological and environmental protection and resolutely fighting pollution prevention and control, have been issued one after another to actively carry out water pollution control actions.


The regional distribution difference is obvious, sichuan occupies the national first place

By the end of 2017, China had built 8,591 sewage treatment plants, including 2,209 in cities, 1,572 in counties and 4,810 in towns.
From the perspective of the regional distribution of sewage treatment plants in China, it is mainly concentrated in eastern China. At the end of 2017, there were 3,065 sewage treatment plants (703 cities, 332 counties and 2,030 towns), accounting for 35.68% of the number of sewage treatment plants in China.
The second area is southwest China, with 2,111 cities (281 cities, 286 counties and 1,544 towns) at the end of 2017, accounting for about 24.57 percent of the country's sewage treatment plants.


PPP model gradually rise, policy norms good for private enterprises
In order to solve the local government debt problem and promote the marketization process, the ministry of finance and the national development and reform commission began to promote the PPP model on a large scale in 2014. Since then, PPP has experienced rapid expansion.
Meanwhile, since December 2014, the ministry of finance has announced four batches of PPP demonstration projects, with a total number of 1,093 projects and a total investment of 2.6 trillion yuan.
Among them, the fourth batch of PPP demonstration projects newly released in February 2018 totaled 396, among which 36 were sewage treatment projects, accounting for 9.09 percent, reaching a new high, with a total investment of about 15 billion yuan.
With the gradual development of these projects, a large number of social capital will be brought into the sewage treatment industry, which is conducive to the development and growth of sewage treatment enterprises.


State-owned enterprises control the proposed large - scale construction projects
In recent years, China's sewage treatment industry has grown rapidly and has become a competitive industry.
At present, there are 336 sewage treatment enterprises above the scale in China. The industry develops rapidly and the market competition is fierce.
At present, the number of state-owned enterprises, collective enterprises, foreign enterprises, Hong Kong, Macao and Taiwan investment enterprises, private enterprises and other enterprises of a certain nature account for 96% of the total number of enterprises in the sewage treatment industry.
Judging from the competitive landscape of China's sewage treatment industry, state-owned enterprises now have the highest market share (by sales revenue), followed by other enterprises, although their share in China's sewage treatment market has declined slightly in recent years.


(Source: 前瞻经济学人)