INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2002.  ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

SUMMARY

During 1996 to 2000, China invested USD 54 billion (RMB 450 billion) on various aspects of environmental protection and pollution control.  From 2001 to 2005, China will invest USD 84 billion on environmental protection projects: water pollution control (USD 36 billion), air pollution control (USD 30 billion), solid waste disposal (USD 11 billion), ecological protection (USD 6 billion), and infrastructure (USD 1 billion). 

To meet the challenge posed by heavy water pollution and water resource shortages, China plans to intensify construction of municipal sewage facilities on a large scale. During the 10th FYP (2000-2005), all cities must build sewage treatment facilities. The Chinese government estimates that over 2000 municipal sewage treatment facilities must be constructed to meet the mandate set by the State Council. Along with the pipeline network, China plans to invest USD 36.30 billion (RMB 300 billion).

The sewage treatment rate in China was almost zero before 1970; reached 3% in the 1980s; and now only averages around 10%. By 2005, the sewage treatment rate is expected to reach 60% in cities with population over 500,000, and no less than 70% in the provincial capitals and key resort cities. On average, Northeast China currently treats 22% of municipal sewage.

Provincial governments in the northeast region plan to construct 89 municipal sewage treatment facilities and 76 industrial wastewater treatment projects during the 10th FYP.

It is interesting to note that in the U.S., every 10,000 people are served by a sewage treatment facility. In China’s urban and suburban areas, every 1.5 million people are served by one sewage treatment facility.

In 2000, Northeast China discharged 2.07 billion tons of municipal sewage and 1.99 billion tons of industrial wastewater, which represented 9.36% and 10.25% of the total sewage and wastewater discharged throughout China in 2000. All of the major rivers in the region have serious organic pollution problems. Liaohe River, which runs through the entire Liaoning Province, is the most heavily polluted river in China. Despite recent progress, a huge amount of sewage continues to be discharged into rivers without being treated, which seriously pollutes the region’s Bohai Sea, rivers and lakes.

Although construction of municipal sewage treatment facilities is a priority action item on the central and local governments’ agenda, these ambitious construction plans are under-funded.  Existing projects are primarily financed through acquisition of capital by the central from the World Bank, Asian Development Bank, or concessionary financing arrangements with foreign governments. These funds are then transmitted to provincial governments as partial funding of facility construction. Most local governments are expected to generate capital to match the contribution derived through the central government.

Domestic production of sewage/wastewater treatment equipment is limited in terms of production output and technical sophistication. Nevertheless, such equipment enjoys the predominant market share due to lack of foreign exchange to purchase foreign equipment. The provincial and local level governments are the primary buyers because private municipal treatment facilities do not exist.  They generally lack sufficient foreign exchange; and prefer foreign investment transactions and encourage the BOT model.

U.S. companies have captured a very limited share of the market for export of pollution control equipment to Northeast China. Competition from companies located in Japan and the European Union is fierce, particularly because many of these governments offer bilateral assistance.  USFCS is optimistic that American trade financing methods may increase trade opportunities in the future. Assuming that U.S. companies can help buyers locate financing, long-term growth potential exists; while in the short and near-term administrative, structural, and financial barriers will continue to impede market access.  

A.         MARKET HIGHLIGHTS / BEST PROSPECTS

This report is primarily based on information obtained directly from the provincial level environmental protection bureaus in Liaoning, Jilin, and Heilongjiang provinces; various provincial level statistical bureaus; and other Chinese government agencies.  The US Commercial Service in Shenyang (USCS) also visited a few projects underway in the region.

A.   Market Profile

1.         Municipal Sewage

Northeast China discharged 2.07 billion tons of municipal sewage, which represented 9.36% of the national total discharge load (22.09 billion tons) in 2000.  That year, the population of Northeast China was 106.55 million, which represented 8.23% of the total population in China (1.3 billion). Extrapolating this data, the northeast region of China discharged 5.67 million tons of municipal sewage per day, and 19.13 tons of municipal sewage per person per year.

Liaoning, Heilongjiang and Jilin respectively generated 47%, 29% and 24% of the total regional municipal sewage load.   Liaoning, the most populous province in the Northeast (42.38 million), generated 966 million tons of municipal sewage.  Heilongjiang, the second most populated province in the region with a 36.89 million population, generated 611 million tons; while Jilin province (27.28 million population) generated 492 million tons of municipal sewage.  Each year, 700 million tons of municipal sewage discharge is added to the existing load.  Shenyang city in Liaoning Province is ranked the top polluter by discharging 550 million tons of municipal sewage, contributing 80% of sewage to Liaohe River each year.  Liaohe River runs through Liaoning Province and is the most heavily polluted river in China.

Source: China Statistical Yearbook 2000(P/102, P/782), China Statistical Yearbook 2001 (P/92, P/790).

At present, eleven municipal sewage treatment facilities are operational in the northeast region. Most of them engage in primary sewage treatment. The combined municipal sewage handling capacity of the municipal treatment facilities is 207 tons per day (75,555 tons annually), which accounts for 36% of the total annual municipal sewage treatment load.  In Liaoning, six city level municipal sewage treatment facilities have been built,  with total handling capacity of 930,000 tons per day. In Jilin, one sewage treatment facility handles 390,000 tons per day. In Heilongjiang, four sewage treatment facilities are in operation with total handling capacity of 75,000 tons a day.

In theory, if all the municipal sewage treatment facilities were in full operation, existing facilities would be capable of treating 33% of sewage discharged in Liaoning, 29% in Jilin and 44% in Heilongjiang. However, many facilities fail to operate at full capacity due to various reasons that will be explained later in this report.  Therefore, the actual municipal sewage treatment rate currently reaches only 16% in Liaoning, 15% in Jilin and 35% in Heilongjiang, according to the Environmental Protection Bureau located in each of these three provinces.  As a result, 78 % of municipal sewage is directly  discharged into rivers and the sea without any treatment in Northeast China.

Source: Liaoning EPB, Jilin EPB and Heilongjiang EPB.

2.       Industrial Wastewater

In 2000, government statistics indicated that 5303 enterprises exist in the Northeast, which accounts for 7.47 % of the total number of industrial enterprises in China. These enterprises discharged 1.99 billion tons of industrial wastewater, which accounted for  10.25 % of the total industrial wastewater load in China, down 5% compared with the  discharge percentage in 1999.

Due to its heavy industrial base, Liaoning accounted for 55% (1.09 billion tons) of all industrial solid waste discharged in the Northeast in 2000, which is two times more than industrial waste discharged in Heilongiang and almost three times more than industrial waste discharged in Jilin.  Heilongjiang and Jilin respectively accounted for 26% and 19% of the total regional discharge load.

Of all the industrial wastewater discharged in the northeast region 2000, 77 % reached the national discharge standard, which left 431 million tons sub-standard wastewater discharge into rivers and the sea.  Even if the “dabiao paifang” (discharge volume which meets the requirements), is increasing there is still a huge amount of pollutants and poisonous elements that are discharged because the national standard only regulates COD discharge.

 In 2000, five primary industries generated 75% of the total industrial wastewater load in Liaoning:  chemical (191 million tons, 17%), mining (183 million tons, 17%), petroleum processing and coking (179 million tons, 16%), black metal smelting, rolling and processing (159 million tons, 15%), and paper making and paper products industry (105 million tons, 10%). In 2000, five primary industries generated 66% of the total industrial wastewater load in Heilongjiang: mining (89 million tons, 17%), paper making and paper products (85 million tons, 16%), power, gas and water supply (80 million tons, 15%), black metal smelting, rolling and processing (47 million tons, 9%), and mechanical electrical and electronics equipment manufacturing (43 million tons, 8%).

In 2000, the northeast region treated 3.24 billion tons of wastewater, which accounts for 9.31% of total wastewater treated in China. Liaoning treated 1.78 billion tons (55%), Heilongjiang treated 1.06 billion tons (32.95%) and Jilin treated 389.78 million tons (12%).  Nearly 71% of the total wastewater treated in the Northeast was recycled.

Among the three provinces in the northeast region, Heilongjiang appears to have the  best handle on its industrial wastewater management.  Heilongjiang took the lead in wastewater treatment rate by achieving 94.55%; followed by Liaoning at 91.8 %; and Jilin at 78%. Compared with rates achieved in 1999, Heilongjiang raised its treatment rate by 4.59 % , Liaoning by 3.98 % and Jilin 1% in 2000. Of the total wastewater discharged which met the discharge standard, Heilongjiang also ranked first by achieving 83.9 % compliance, while Liaoning achieved 80% and Jilin achieved 68%.  Compared to compliance rates in l999, in 2000, Heilongjiang jumped by 15.77%, Liaoning increased by 8.3%; and Jilin was up by 5%.

Source: China Statistical Yearbook 2000 (P/771): China Statistical Yearbook 2001 (P/779)

In 2000, environmental projects under construction in the northeast region numbered l981, among which 39% of the projects were designated industrial wastewater treatment.  In 2000, Liaoning invested USD 74.73 million in 350 industrial wastewater treatment projects; Jilin invested USD 25.50 million in 160 industrial wastewater treatment projects; and Heilongjiang invested USD 87.52 million in 259 projects.

The northeast region’s installed base reached 4513 units for industrial wastewater treatment, which accounted for 7% of the national total (64,453) in 2000.  Liaoning ranks first by having 2350 units; Heilongjiang ranks second with 1310 units; and Jilin stands last with 853 units.  Most of the industrial manufacturers in the province use equipment that is technologically outdated by 20 years or more, and the majority of industrial enterprises use unsophisticated, low cost, approaches to treat industrial wastewater.

B.   Best Sales Prospects

Numerous cities and counties in the Northeast urgently need appropriate technology, equipment and skills used in management of municipal sewage and industrial wastewater treatment.  Although direct sales may be possible if foreign equipment suppliers are willing to assist the Chinese buyer to raise financing, the preferred transaction type is foreign direct investment. These issues are discussed below in more detail.  

The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) issued The Environmental Protection Industry Development 10th Five Year Plan in 2001, in which it defined the basic principles, main objectives, key subsectors, strategies and measures.  The plan designated ten key development subsectors: air pollution treatment, water pollution treatment, solid waste disposal and treatment, water conservation technology and equipment, ecological environmental protection technology and equipment, clean production technology and equipment, environment monitoring apparatus and instruments, environmental protection materials and agents, resource multi-utilization and environmental service.  Foreign equipment suppliers can identify best sales prospects from the plan.  The policy objectives for water pollution treatment are listed below.

Municipal Sewage Treatment

Focus on the development of municipal sewage treatment technology and complete set of equipment with sewage handling capacity of over 200,000 tons per day. 

Develop high efficiency and energy conservation biological de-nitrification and phosphorous removal technology, recycle active sludge technology, move bed biological membrane technology and UASB reactor, anaerobic biological filter cell, anaerobic expansion bed, and anaerobic fluid bed.

Research and develop low speed multistage centrifugal blower, diving sewage pump, oxidation channel single purpose equipment, advanced aeration equipment, sludge treatment and single purpose disposal equipment. 

Advance the equipment manufacturing level for grill, aeration, sludge scraping, sucking, hoisting, de-watering; develop sludge gas electrical power generation; enhance the performance and service life of water pump, blower, valve and other relevant electrical application equipment. 

Focus on solving problems such as low quality and inappropriate variety of domestically produced equipment.  Develop sewage treatment technology and equipment, oxidation channel and oxidation pond treatment and sludge cleaning equipment, strengthen aeration technology and equipment, sludge treatment technology and equipment used for residential communities. 

Speed up the development of medium and small size municipal sewage treatment facilities, applied technology, and be able to domestically produce a complete set of equipment with capacity of 100,000 tons per day.

Industrial Wastewater Treatment

Focus on the development of water treatment unit technology and equipment; enhance the professional production scale; standardize the production; and improve product quality.

Focus on the development of combined multi-functional water treatment technology and equipment; high density organic wastewater treatment technology and equipment (used for fermentation, medicine, papermaking, and slaughterhouse wastewater); surface wastewater, waste liquid and ferrous metal mining wastewater treatment technology and equipment, wastewater deep treatment, purification, and sterilizing technology and equipment, gray water treatment, recycle and utilization technology and complete set of equipment, oil-based wastewater treatment, oil field purification technology and equipment, coal mine ground water and high turbid salty wastewater treatment technology and purification equipment, membrane treatment and micro-straining purification technology and treatment equipment.

To identify best prospects, foreign equipment suppliers are encouraged to consult a directory titled Present Environmental Protection Industry Development Directory, which is published by the State Environmental Protection Administration. Similar directories may be available from provincial and municipal governments. The following best sales prospects were developed using the directories.

Water Quality Monitoring Apparatus

·         lake and river water quality sampling instruments

·         COD, BOD, DO, and PH testing apparatus, mercury testing apparatus

·         sewage flow monitoring and recording apparatus

·         sampling devices in line with flow proportion

·         SS, phenols, CN and oil testing apparatus

Water Pollution Treatment Equipment

·         industrial water conservation equipment

·         municipal sewage treatment equipment, complete set

·         industrial wastewater treatment and recycle utilization equipment, complete set

·         sludge digestion and mud and water separator

·         high efficiency and low energy aeration device

·         high efficiency and new model oil and water separator

·         high efficiency vaporizer

Water Pollution Treatment Engineering and New Technology

·         municipal sewage treatment engineering services

·         simple oxidation pond sewage purification for field irrigation engineering

·         treatment of black liquid generated from pulp making and paper making

·         anaerobic fermentation and integrated utilization technology for treatment of high density organic wastewater generated during the production of food industry, light industry, chemical industry, and pharmaceutical industry

·         wastewater reutilization technology used in the power plant, iron and steel plant, petrochemical industry and printing industry

·         recycle and safe treatment technology for waste acid dregs and mineral acid wastewater

·         gold mine cyanide wastewater treatment technology

·         recycle of electroplating waste liquid and thick liquid regeneration technology

·         recycle and treatment technology for high density sulfur wastewater

·         active sludge method and high efficiency conservation treatment technology for organic wastewater

·         purification treatment technology for low radioactive wastewater in nuclear facilities

·         treatment technology for sewage discharged into sea

New Materials

·         high efficiency, low toxic and safe water quality stabilizing agent, neutralizer and disinfectant

·         new type and high efficiency ion exchanger and absorber

·         advanced membrane separating materials

·         high efficiency and low toxic wastewater coagulant aid and flocculation agent

·         advanced high temperature resistant filtration materials

B.      COMPETITIVE ANALYSIS

A.   Domestic Production

In 2001, State Environmental Protection Administration (hereafter referred to as “SEPA”) completed the largest nationwide investigation of the environmental and pollution control industry since the establishment of the People’s Republic of China in 1949.  According to statistics developed by SEPA, 18,144 Chinese enterprises were actively involved in the environmental protection and pollution control sector in 2000. These enterprises are concentrated in coastal and riverside areas in China. 

Small firms with fixed assets valued at less than RMB 15 million (USD1.8 million) accounted for 86 per cent (15,536 enterprises).  Medium scale enterprises with fixed assets valued at less than RMB 15 - 50 million  (USD1.8 – 6 million) accounted for 8%  (1,418 enterprises). Large-scale enterprises with fixed assets valued at more than RMB 50 million (USD 6 million), accounted six per cent (1,190 enterprises). [Note:  Percentages calculated in terms of enterprise number, not capitalization or sales revenue.]

With regard to source of capital to support these enterprises, 96% (17,367) are capitalized from within China. Among the enterprises capitalized from domestic sources, the state-owned enterprises account for 35 %, collective enterprises 17 %, limited liability companies 18 %, private enterprises 17 %, contractual joint ventures 6%, joint-stock companies, 5%; and others 2%. Foreign invested enterprises accounted for 4% of the total number of enterprises with Hong, Taiwan and Macau accounting for 2% (366 enterprises) and other foreign invested enterprises 2% (411 enterprises). [Note: Percentages are calculated in terms of enterprise number, rather than capitalization or sales revenue.]

China Environmental Protection Sector Summary 2001

Source: China Environmental Protection Industry, P/10, Issue No.2, 2002.

China Environmental Protection Sector Analysis 2000

Source: China Environmental Protection Industry, P/11, Issue No.2, 2002.

Nearly 10% percent of the total number of active environment sector enterprises are located in the northeast region (1729 enterprises); the majority being rather small. More than 50% of the northeastern enterprises are located in Liaoning. Compared to other provinces Liaoning ranks eighth in total number after Zhejiang (1,967), Jiangsu (1,711), Guangdong (1,564), Hunan (1,114), Shandong (1,071), Hebei (994) and Fujian (965).  With regard to the number of persons employed by environmental sector enterprises,  Heilongjiang ranks second after Henan (820,159) and Liaoning ranks fifth.  In terms of sales revenue generated by enterprises active in the environmental sector, Liaoning ranks fifth (USD 1,670 mn.) after Zhejiang (USD 2,964 mn.), Jiangsu (USD 2,540 mn.), Shandong (USD 2,263mn.), and Guangdong (USD 1,736 mn.). 

Source: China Environmental Protection Industry, P/12, issue No.2, 2002.

In 2000, domestic environmental equipment manufacturers were concentrated in the subsectors of water pollution treatment and air pollution treatment.  The total sales revenue of these two categories accounted for 76% of the total revenue in the environmental sector.

The environmental protection equipment manufacturers and service providers in the Northeast China are most active in water and air pollution control due to the availability of equipment funding through Chinese government sources. In 2000, among the total number of enterprises engaged in environmental protection sector in Liaoning (726), 92 engaged in the manufacture of sewage/wastewater treatment equipment or provided related services.  The geographic distribution throughout the province is broad with most being located in Shenyang (35).  Others are located in Dalian (19), Anshan (14), Jinzhou (5), Liaoyang (5), Tieling (4), Panjin (4), Yingkou (3) and Dandong (2).

Domestic production of sewage/wastewater treatment equipment is limited in terms of production capacity and technical sophistication. According to environmental experts in the region, most of the environmental protection equipment and technology utilized in the Northeast is equivalent to the technical level of sophistication reached by developed countries in the 1960’s and 1970’s. Nevertheless, such equipment enjoys predominant market share due to lack of buyer’s foreign exchange to purchase foreign equipment.

Since 1998, the domestic production of municipal sewage treatment equipment has made great progress due to financial and material support from the central government. However, many problems remain, such as limited research and development capability,  shortage of capital investment, long equipment development cycles, and limited ability to commercialize the technology innovations. The local manufacturers do not typically produce an equipment line or a complete system.  Therefore system integration is problematic, and some manufacturers cannot meet the various technical levels used in different regions within China. 

Technology

To promote the development of the environmental protection industry, SEPA has  conducted annual technology assessments and promoted selected environmental protection technologies for practical application every year since 1999. The technologies certified by SEPA enjoy priority selection in local environmental management plans. From 1999 to 2002, SEPA issued four lists containing 281 technologies/products. SEPA selected 69 industrial wastewater treatment technologies and 47 municipal sewage treatment technologies to be promoted nationwide, which accounted for 41% of the total domestic environmental protection technologies. 

Ten industrial wastewater treatment technologies and four municipal sewage treatment technologies were developed in the Northeast, which represent 14 % and 8.5 % of the  technologies developed nationwide. The number of technologies certified for deployment is an indication of potential for technology commercialization in the Northeast.  The technologies developed in the Northeast are listed below.

Equipment

In general, the equipment sophistication level of environmental protection equipment manufactured in China lags 15-30 years behind equipment manufactured in developed countries. The portion of Chinese equipment that reaches international levels of sophistication is less than four percent.   

The primary reason that domestic EP equipment lags behind global standards is that it was designed for manual use, and lacks automated controls. The domestic environmental equipment has many other disadvantages such as low treatment capacity, limited functions and models, high energy-consumption, high maintenance frequency and cost, and short service life. Although the equipment appears to be functional in terms of visual design, the equipment is not reliable or durable in an operational environment.  According to Chinese environmental protection authorities, domestic equipment is “usable, yet does not function well” compared with the advanced foreign equipment.  Typical design flaws include unreliable automatic control sensors, poor underwater mechanical seal, and inappropriate materials.

The Ministry of Foreign Trade and Economic Relations (MOFTEC) investigated 40 kinds of equipment used in 32 municipal sewage facilities (including foreign funded sewage treatment facilities) which were built and put into operation by the end of 1999.   MOFTEC concluded that the portion of equipment with domestic content exceeding 50% accounted for 29.5% of all equipment employed at the sewage treatment facilities.  The equipment having high domestic content included vehicular sand scraper, chain sand scraper and conveyor, center (periphery) conveying sludge scraper, periphery (center) conveying sludge sucker, vertical surface aeration machine, centrifugal blower, sludge concentration machine, composting pile turn-over machine, composting rolling dyer, composting particle dyer, composting particle maker, valves, and brakes. 

Equipment in use at these facilities having domestic content of less than 25% accounted for 54.5%. The following equipment types are classified as “low domestic content”: dreg presser, vehicular sand sucker (pump sucking), vehicular sand sucker (siphonic sucking), clock type deposition equipment, vehicular sludge scraper, chain driving sludge scraper, brush aeration machine, stirrer (propeller), Roch blower, gyroscopic crest gate, sludge heater, centrifugal de-watering machine, generator, sludge gas compressor, sludge gas boiler, sludge return pump and all testing apparatus.

B.   Third-Country Imports and Market Position

In 2000, the foreign invested enterprises in environmental protection sector accounted for four percent (777 enterprises), which is a very small number compared to the total number of environmental protection equipment manufacturers throughout China (19,118). The total contractual import value was USD 1.7 billion. 

Since the environmental protection industry is a new industrial sector in China, only incomplete statistical data is available from statistical books, websites, and  environmental protection authorities. Chinese customs data provides no breakdown concerning source of imported equipment due to lack of detailed data collection by trade or environmental protection agencies.  Therefore it is not possible to determine the portion of U.S. imports.  SEPA estimated that the total import value reached USD 1.7 billion in 2000. The State Statistical Bureau plans to create a new statistical category relevant to this industry in 2002. 

Although no detailed statistical figures on third country imports are available, Chinese authorities have indicated that equipment manufactured by companies located in Japan and the European Union have captured the major portion of foreign market share in the northeast region. Equipment suppliers located in third countries pose a significant competitive challenge to American suppliers because the governments of Japan and European Union provide soft loans, technical assistance for feasibility studies, project planning, and equipment procurement.

In 2000, Japan maintained its active technical exchange programs with Liaoning and Jilin provinces.  Several projects in these provinces were supported by soft loans, and are in the process of implementation.  Japan loaned USD 100 million to Heilongjiang Province for eleven urban environmental protection infrastructure construction and pollution treatment projects, including the Mudanjiang Sewage Treatment Facility.  Japan also assisted Heilongjiang in building six urban environmental protection information centers.

The EU-Liaoning Integrated Environmental Program formally started in l999 with the dispatch of several European experts to work at the Liaoning Environmental Protection Bureau in Shenyang city.  According to the program report, the EU will provide 37 million EURO (USD 42 million) to work with Liaoning to carry out the program within five years.  The program includes seven elements: environmental sensitivity and capacity building, Shenyang urban planning, water resource management, air quality management, energy management, clean production, Industry structural adjustment and investment promotion.

A few European nations have independently undertaken other activities in the northeast region.  In 1999, Norway granted USD 1.8 million to Heilongjiang Province to support the Songhua River automated water monitoring project. The project smoothly proceeded in 2000.  Norway agreed to grant an additional Norwegian krone 20 million for the expansion of the project.  Equipment manufactured in Germany, Italy, and Australia has been imported by various entities in the Northeast. 

Japan and Europe are likely to maintain their current market share, assuming continuation of  well-established relationships with Northeast provincial governments.  Due to these relationships, Chinese government authorities tend to encourage the purchase of equipment manufactured in these countries.

C.   U.S. Market Position

Although accurate statistics are not available, the general impression of Chinese companies and Chinese government officials are useful to gauge U.S. market presence. Chinese officials estimate that the U.S. market share in this sector is less than seven percent nationwide.

U.S. pollution control activities in the northeast region are not prominent. Research throughout the northeast region by the Commercial Service revealed that only a few U.S. firms are currently pursuing sewage/wastewater treatment projects in the region. Although it is possible that many sensitive negotiations are underway, our sources failed to reveal any significant activity.

With regard to U.S. activity in the water/sewage treatment subsector, Micro-Bac International Inc. (a U.S. leader in use of micro-bacteria to treat sewage) signed an exclusive sales agent agreement in 2002 with a company in Shenyang city, Liaoning province.  In Heilongjiang, three Sino-US joint ventures engage in purification and bottling of drinking water.

American pollution control equipment and environmental protection technologies are recognized as being world-class.  However, Chinese companies and Chinese government officials have pointed out that U.S. equipment prices are always beyond what buyers are able to pay.  Buyers must look for other less-expensive products or turn to other countries that provide soft loans.  Therefore, high prices and lack of financial assistance from the U.S. government substantially hinders the entry of U.S. products in the Northeast.  Perhaps with support from U.S. trade financing agencies such as TDA and ExIm Bank, U.S. imports may gradually increase in the future.

All Chinese government agencies that are responsible for environmental issues in Liaoning, Jilin and Heilongjiang provinces have expressed receptivity to cooperation with American companies.  Chinese officials are particularly interested in receiving United States government support for technical assistance concerning a variety of pollution control topics.

C.      END-USER ANALYSIS

Generally speaking, the end users of sewage/wastewater treatment equipment are municipal governments, state-owned enterprises, and quasi-private enterprises (which are formerly state-owned enterprises that are now organized on a corporate model, with private and public shareholders).  These quasi-private enterprises and state-owned enterprises are required to comply with discharge limits imposed by central and provincial government regulations.  Most enterprises have an urgent need for more sophisticated equipment but lack financial resources to procure it. Therefore, the majority of opportunities for export of pollution control equipment are typically characterized as foreign investment transactions.  

A.   Municipal Sewage

During the 10th Five Year Plan, Northeast China plans to complete 89 projects, which will require investment of RMB 20.73 billion (USD 2.5 billion). 

Liaoning plans to build 41 wastewater treatment facilities in 14 cities, which is expected to cost RMB 7.4 billion.  Thirteen facilities are under construction, and when completed will offer a combined handling capacity of 1.74 million tons per day.  Twenty-six additional facilities will be built with combined capacity of 2.43 million tons per day.  Two facilities will be extended; and their combined handling capacity will reach 450,000 tons per day.  After all these facilities are operational, the combined sewage handling capacity will be 5.55 million tons per day, which accounts for 44% of total wastewater discharge in Liaoning Province.

Jilin plans to build 18 wastewater treatment facilities in eight cities.

Heilongjiang has decided to focus on sewage treatment projects along the Songhua River, which runs through Harbin and several other cities. In order to achieve development goals based on the current project plan, handling capacity, technical level and price comparisons, Heilongjiang plans to encourage the build-operate model. The province plans to construct 18 wastewater treatment facilities in eleven cities.

Liaoning Province

Jilin Province