Opportunities for environmental companies on China’s new Silk Road

China’s environmental services companies are eyeing up potential profits offered by ‘One Belt, One Road’, writes Zhang Chun
<p>(Image by Baike)</p>

(Image by Baike)

‘One Belt, One Road’ (OBOR) is centre stage of China’s new national development strategy, the 13th Five-Year Plan, published on March 17.

OBOR was first unveiled in 2013, as part of president Xi Jinping’s plan to assert China’s influence and economic power by reviving the old Silk Road trade route. It is based on building overseas infrastructure, such as ports, container terminals, railways, roads, power plants and factories.  

The project provides valuable overseas markets for Chinese industries that have experienced slackening demand and overcapacity at home.

In the ‘work plan’ presented at the opening of China’s National People’s Congress, premier Li Keqiang said Chinese environmental enterprises will benefit from the new investment contracts made through OBOR.

Luo Jianhua, secretary general of the China Environment Chamber of Commerce proposed that enterprises, in particular mineral and chemical companies, should try to emulate German chemical giant BASF SE, which co-opts water treatment and sustainable design into its projects. 

French environmental services company Veolia (BASF’s partner), has already agreed to partner with Chinese enterprises. 

For environmental technology companies, this is a change to secure lucrative contracts and to gain valuable experience of operating in international markets.  

“If environmental enterprises don’t venture into the wider international market and work hard to gain experience there, their capabilities will not improve, and they will find it difficult to meet global market requirements,” Luo said.

Since 2011, when the last 12th Five-Year Plan was announced, China has upgraded its environmental sector to a national pillar industry.  As such, environmental enterprises are expected to have a much more active role in all aspects of the country’s economic expansion.

“In the process of going global, China’s environmental enterprises must improve many of their capabilities. We need to start now and actively take on the opportunities brought about by globalisation,” said Zhao Lijun, chairman of Poten Enviro and president of the China Environment Chamber of Commerce, talking to reporters ahead of the Beijing conference.

‘Greening’ OBOR projects by making efficient use of materials and natural resources such as water, is crucial if China is to avoid exporting its carbon footprint.

Companies that can do this effectively could be big beneficiaries.

China’s total amount of foreign investment will rise from US$120 billion per year in 2014 to US$500 billion by 2030, says Jiang Kejun, a researcher from the Beijing-based Energy Research Institute.

However, many Chinese banks – including the China-led Asia Infrastructure and Investment Bank – have not yet finalised their lending criteria for projects that will be included in OBOR, prompting fears that safeguards will be weak.