In the last eight years, the Shanghai municipal government has made a very strong effort to improve the quality of Shanghai’s environment. It has focused on improving Shanghai’s air and water quality, solid waste disposal practices, and ecological protection capabilities. The Shanghai government has also attempted to decrease industrial and agricultural pollution by implementing a Three-Year Action Plan for Environmental Protection every three years since 2000.
At the same time, the city’s environmental problems persist and are even worsening in some areas. With Shanghai’s environmental situation remaining dismal, the Shanghai municipal government is expected to continue its strong push to improve the quality of Shanghai’s environment in the next three years.
Because the end of the third Three-Year Action Plan for Environmental Protection is nearing, the future direction of the market is hard to predict. However, looking at the investment trends since the commencement of the Three-Year Plans, the Shanghai municipal government appears committed to its campaign to clean up the environment. Because Shanghai’s environmental protection efforts will continue with equal or even more vigor, environmental protection-related foreign companies with a strong understanding of the China markets for their particular goods and services should find numerous opportunities to begin or expand operations in China and offer their expertise, technologies, and services.
Market Overview and Trends
Shanghai’s acute environmental problems stem from a deteriorating natural resource base, dense population, heavy reliance on soft coal, outmoded technology, underpriced water and energy, and a breakneck industrial growth rate that averages over 10% annually.
In China’s 11th Five-Year Plan (2006-2010), Beijing set ambitious goals. The plan calls for a 20% decrease in energy consumption per unit of GDP and a 30% decrease in water consumption per unit of industrial added value. Beijing also plans to decrease the discharge of major pollutants (SO2, NO2, inhalable particles) by 10% from the 2005 level by 2010. The central government is planning to spend an estimated $157 billion USD (around 1.5% of the national GDP) from 2005-2010 to improve the quality of China’s environment.
In anticipation of hosting the World Expo in 2010, Shanghai is funneling an immense amount of resources into environmental protection. Since 2000, the municipal government has launched an environmental action plan every three years. These action plans list guiding thoughts and principles, and they outline general goals and the various areas of focus. The third round (2006-2008) of the Three-Year Environmental Action Plan contains three key aspects: infrastructure construction, pollution control and treatment, and improvement of management mechanisms.
In its effort to improve the environment, Shanghai has invested more than 225 billion RMB (32.8 billion USD) since 2000 on renovation and modernization of existing facilities, construction of new infrastructure, expansion of existing environmental programs and creation of new environmental programs. The municipal government has allocated more than 3% of its GDP in this market each year since 2000. According to the Shanghai Environmental Bulletin 2009, the amount spent in this sector last year alone totals 42.2 billion RMB, 3.08% of the city’s GDP. As Shanghai prepares to roll out the fourth round of the Three-Year Environmental Action Plan, the government has expressed its intention to continue allocating more than 3% of its GDP to environmental programs until 2010.