President Xi Jinping's visit to a recycling company Monday drew renewed attention to environmentally friendly industries.
Xi said recycling is a sunrise industry and that garbage is a misplaced resource, during his visit Monday to a branch of recycling company Shenzhen GEM High-Tech Co in Wuhan, Central China's Hubei Province.
The stock price of the Shenzhen-listed company was boosted by Xi's visit, rising 23 percent in three days. Shares in many other environmental protection-themed companies were also boosted.
This is the latest favorable news for the environmental protection sector in China.
Environment Minister Zhou Shengxian said Saturday during an ecological forum that China will add hundreds of billions of yuan in investment annually in environmental protection sectors in the next five years.
Industry analysts said that high-energy-consuming and polluting sectors will face an industry reshuffle, but stricter measures will also mean greater market potential for companies specializing in environmental protection and energy conservation.
According to the 12th five-year plan (2011-15) for environmental protection released in July 2012 by the State Council, the output of green sectors will grow to 4.5 trillion yuan ($733.5 billion) by 2015 from 2 trillion yuan in 2010.
The sectors account for around 9 percent of China's GDP and are currently growing at an annual rate of 15 to 20 percent, Zeng Xiangang, an environment professor at Renmin University of China, told the Global Times Tuesday.
Government support
Zeng said four fields - energy conservation, pollution treatment, ecological protection and recycling - have particularly big market opportunities.
The government offers large subsidies for environmental protection sectors, and imports of some environmental protection equipment are exempt from tariffs, according to Zeng.
The Ministry of Environmental Protection said in May that local governments should give priority to cost-effective domestic-branded air quality equipment.
Du Xinping, marketing director of Hebei Sailhero Environmental Protection High-tech Co, a Shenzhen-listed producer of pollutant monitors, told the Global Times Tuesday that this was a favorable policy for his company.
The company also received a total of 13.62 million yuan in government subsidies in the first five months of the year, according to a statement released by the company in June.
As well as the government subsidies that are available, companies in these sectors have advantages in applying for government funding and bank loans, Zou Xianmei, marketing manager of Beijing-based sewage treatment company Gohigher Environmental Tech Co, told the Global Times Tuesday.
Major Chinese banks have promised to offer credit support for environmental protection sectors.
By 2012, China Construction Bank had offered loans worth 239.6 billion yuan for clean energy, energy saving and other environmentally friendly projects, the bank's Vice President Zhu Hongbo told a forum Friday.
Air quality gets a boost
Zhou said that China will issue an action plan to curb air pollution by the end of July or at the beginning of August, with the priority being greater control of PM2.5 - airborne particles that are smaller than 2.5 micrometers in diameter - in a move to curb worsening air pollution in many Chinese cities since the beginning of the year.
The State Council also released a series of tough measures in June to improve air quality and set a target to reduce emissions per unit of GDP in key industries by more than 30 percent by the end of 2017.
Five out of 10 listed companies specializing in air pollution treatment have said they expected their net profits to grow by more than 50 percent in the first half of 2013 compared with the year before, attributing the growth to an increasing number of new orders because of favorable policies.
Xiamen Savings Environmental Co said it expected over tenfold growth in net profit year-on-year for the first half.
Boosted by favorable government policies, the market for PM2.5 monitors has doubled in 2012, and sales of the company's PM2.5 monitors also doubled during the year, Du said.
China has required that all cities at prefecture level or above conduct PM2.5 monitoring by 2015. Smaller cities need to buy three to five PM2.5 monitors and larger cities need 10 to 20 units, mainly purchased by government agencies, Du said, noting that the market will continue to grow in the next few years.
Although foreign brands hold a dominant 70 percent share of the PM2.5 monitor market, Du said his company's monitors are gaining more market share because of government support and cost advantages.
PM2.5 monitors produced by Du's company cost an average of 150,000 yuan per unit, 40 percent cheaper than equivalent units sold by foreign brands, according to Du.
He also said that equipment for monitoring pollution sources, which are needed by enterprises to control emissions, will see large growth in the next two years.
More firms joining
Most companies in the environmentally friendly sectors are of medium and small size, which rely on technology and differentiated strategies to compete, Dai Xingyi, director of the Urban Environment Management Research Center at Fudan University, told the Global Times Tuesday.
"In Shanghai alone, there are more than 1,000 water treatment companies and 200 firms specializing in energy conservation," Dai noted.
Some industries are already seeing fierce competition, such as water treatment, but PM2.5 control and soil restoration are new fields with a shortage of supply, so companies with advanced technologies in these new fields will see a growing market, Zeng said.
"However, some environmental protection sectors will also see blind expansion, which will lead to overcapacity, as with the solar panel industry," Dong Liming, a professor at the College of Urban and Environmental Sciences at Peking University, told the Global Times Wednesday.
Dong noted that the government should reinforce supervision to avoid overcapacity in environmental protection sectors.
Meanwhile, a larger scale of the environmental protection sectors is not necessarily better, Dai said, because treatment of pollution merely defends rather than creates social wealth.
Some sectors, such as steel making, are suffering overcapacity, and the surplus capacity creates an unreasonable burden on environmental protection, Dai said, noting that the key method to protect the environment is to adjust industrial structures.
The fundamental solution is to reduce the emission of pollutants by optimizing the pattern of economic growth, Dai said.
For example, coal burning is a major reason for air pollution, and clean utilization of coal will be a huge industry in the future, which will improve air quality and will also be good for sustainable development.
Zou from Gohigher said that the government is likely to increase fees for pollution discharge, pollution control and fees for water resources so that enterprises will take environmental costs into account and reduce pollution.
