By Jake Liddle


In recent years, China has increased its efforts toward combating high levels of environmental pollution, a result of the country’s accelerated economic growth. In 2012, China declared war on pollution, and put aside RMB 3.7 trillion for the battle; more than half of the funds were reserved for combating water pollution.

However, China’s most recent environmental report remains bleak, suggesting that 61.5 percent of groundwater and 28.8 percent of key rivers were classified as “not suitable for human contact.” The contamination is largely caused by industrial and agricultural industries, and the pollution has permeated the water table.

Usable and safe water is scarce, and more than half of China’s cities suffer from water shortages, especially in the arid northern regions. While China has 20 percent of the world’s population, it only possesses seven percent of the world’s water resources. What’s more, these water resources are unreliable and unevenly distributed among provinces and regions.

As China aims to reverse the state of its severe water pollution, demand for high-grade wastewater treatment technologies is increasing.

China’s existing wastewater treatment facilities

China, after developing multiple technologies to treat wastewater, has the world’s second-largest sewage processing capacity, with about 3,340 wastewater treatment plants in 2012. A vast majority — 80 percent —  of these plants use three technologies to remove contaminants from sewage:

  • Oxidization ditches   The modified biological treatment process using long solid retention times to remove biodegradable organic matter is used in municipal and industrial wastewater treatment;
  • Anaerobic Anoxic Oxic (ANANOX) process    The patented low energy, biological denitrification process uses an anaerobic pre-treatment and settlement chamber;
  • Sequencing batch reactors   Wastewater or sewage from anaerobic digesters or mechanical biological treatment facilities is oxidized in batches, with aeration and sludge settlement occurring at the same time in one tank.

China also uses constructed wetlands as an alternative ecological method of treating wastewater and addressing runoff and flood water retention issues. Constructed wetlands are man-made biological environments that combine hydrology, vegetation, and flow paths that provide effective means of treating biochemical oxygen demand, soluble solids, nitrogen, phosphorus, heavy metals, organic pollutants, and pathogens. They can be constructed and customized by biotic or abiotic mechanisms to target pollutants depending on location. Constructed wetland systems are the cheapest method of wastewater treatment, requiring about 30 to 50 percent of China’s rural regions suffer the most from water shortages and water pollution. Rural distribution of wastewater treatment is extremely poor. Only 3 percent of villages and townships possess wastewater treatment facilities, and more than 90 percent lack proper drainage and sewage facilities. Because 300 million rural residents do not have access to safe drinking water, rural areas are in the most need of effective and economical treatment facilities. Due to the lack of infrastructure, dispersed population, and geographical issues, smaller decentralized facilities would be the most effective application.

Opportunities for investors

Foreign investors can bring experience and new technologies to China, where national sentiment attaches importance to the sanitation of water. The Chinese government is expected to spend an additional RMB 4 trillion to improve water infrastructure and household supply. Its keen support for this effort means that, apart from matters concerning water conservancy, environment, and public facility management, foreign investment into the country’s wastewater treatment technology is desperately needed and endorsed by the Catalogue of Industries for Guiding Foreign Investment.

Innovative urban water design and energy-efficient water saving technologies, secondary water supply systems, smart water systems, environmentally friendly rainwater collecting, water purification, municipal pipe networks, and water reclamation technology are auxiliary components that are also open for foreign investment.


About the author: This article first appeared in China Briefing by Dezan Shira & Associates, a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory, and compliance, accounting, payroll, due diligence, and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit

Posted by Jake Liddle