Market Development Status: Emerging
This tool considers any market classified as “upper middle income,” “lower middle income,” or “low income” in the World Bank’s Country Income Classification Level as “emerging.” For the 2024 fiscal year, this is any economy with a gross national income per capita of $13,845 or less.
Data and rankings last updated September 2023. For a detailed explanation of factors and data sources used to calculate these Top Export Market Rankings, please see Our Methodology section.
Market Overview
With the world’s largest population and GDP, China is an important export destination for U.S. exports. China’s environmental technologies and clean energy markets generated a combined USD $110 billion in revenues in 2022. The United States exported $4.18 billion in environmental technology goods in 2022, representing a six percent of China’s environmental technology imports that year. Water and wastewater treatment is the largest environmental technology sector for U.S. exports in China, followed by air pollution monitoring and control and waste management and recycling.
The United States and China have not entered into a bilateral free trade agreement. However, trade between the two countries – the two largest global economies – is substantial. In 2022, China was the third largest purchaser of overall U.S. goods, importing at $154 billion in U.S. goods.
Yale University’s Environmental Performance Index (EPI) ranks China as 107 out of 180 countries for Environmental Health, with low performance on measures related to air quality and heavy metals/soil contamination. The EPI ranking highlights the scope of the environmental challenges facing the country and the growing need for environmental solutions.
China is taking important steps to deliver on its commitments to reduce greenhouse gas emissions since ratifying the Paris Climate Agreement in 2016, but it still has a long way to go. In 2020, China announced dual climate goals to (1) peak emissions by 2030 and (2) achieve carbon neutrality by 2060. As outlined in its 2021 Nationally Determined Contribution, China aims to lower carbon emissions per unit of GDP by over 65% from the 2005 level, increase the share of non-fossil fuels in primary energy consumption to 25%, and bring total installed capacity of wind and solar power to over 1.2 billion kilowatts. In 2021, the U.S.-China Joint Glasgow Declaration was announced, and in November 2023, China released a National Action Plan to control and measure methane emissions.
As of the latest update in November 2023, the Climate Action Tracker rates China as highly insufficient on climate action, both for its policies and its NDC target. This assessment determines that China’s climate and energy policies are currently not strong enough to drive down emissions in a substantial manner during the 2020s and it notes that rapid decarbonization by China – the largest emitter – is critical for limiting global warming to 1.5 degrees Celsius.
Beyond climate, China is pursuing stricter enforcement of environmental controls, including the introduction of new disclosure and reporting requirements for environmental companies and their customers. In 2023, the Ministry of Ecology and Environment issued revised the Administrative Punishment Measures for the Ecological Environment, which strengthened inspection requirements and created a more detailed system of fines and punishments.
While political tensions exist between the United States and China, the volume of trade has remained high, and the two countries have underscored the importance of working together to tackle the climate crisis, including at a November 2023 meeting between President Biden and President Xi Jinping. Through the China Special Envoy for Climate Change, Xie Zhenhua, and U.S. Special Presidential Envoy for Climate, John Kerry, the two governments reaffirmed the sustained implementation of the April 2021 U.S.-China Joint Statement on Addressing the Climate Crisis and the November 2021 U.S.-China Joint Glasgow Declaration on Enhancing Climate Action in the 2020s.
Market Opportunities
Air Pollution Monitoring and Control
Industrial Air Pollution Reduction: China’s longstanding struggle with smog and air pollution, largely due to its coal-powered cement and steel industries, is well known. The steel and cement industries constitute nearly 70% of China’s overall industrial emissions. Large amounts of air pollutants, including sulfur dioxide (SO2), nitrogen oxides (NOx), and fine particulate matter (PM) are emitted during the iron and steel production processes. Since 2019, China’s iron and steel industries have implemented ultra-low emission transformation in the steel production, process, effectively reducing emissions. In 2021, the Ministry of Industry and Information Technology (MIIT) published its 14th Five-Year Plan for Industrial Green Development. The plan outlines China’s ultra-low emission transformation for 530 million metric tons (mt) of steel capacity and the clean production transformation for 460 million mt of coking capacity by 2025.
Key technologies and services in demand include:
- Advanced sensors and monitoring devices for real-time air quality data
- Flue gas desulfurization equipment
- Ambient air monitoring equipment
- Fuel vapor control systems
- Leak detection equipment
- Data analytics and AI to process pollution data
- Continuous emissions monitoring systems
- Particulate matter control systems
- Wet and dry scrubbers to remove multiple pollutants
- Remote sensing technologies
- Selective catalytic and non-catalytic reduction controls
- Dry sorbent injection technologies
- Environmental services and consulting, specifically for engineering and plant design
Methane Abatement: China is the world’s largest producer of hydrofluorocarbons (HFCs) and is responsible for 10% of all human-caused methane emissions. About 40% of China’s methane emissions are gasses that escape during the coal mining process and another roughly 40% stem from the agriculture industry. According to Yale’s Environmental Performance Index, China ranks in the top 10 worst countries for criteria pollutants such as nitrogen oxides and sulfur dioxide, presenting an opportunity for U.S. firms and technologies to help improve the country’s air quality. In November 2023, China’s Ministry of Ecology and Environment and ten other Chinese ministries released its Methane Action Plan, which includes 20 key tasks related to emissions monitoring, technological innovation, development of policy frameworks, and global cooperation. The five-year plan period (2026-2030) will significantly enhance monitoring and accounting of methane emissions. China’s methane plan does not include specific targets for reducing methane emissions. However, it does strive to curb flaring at oil and gas wells, outlines plans to reuse the captured emissions as fuel, and targets methane leak detection and reduction at coal mines.
Key technologies and services in demand include:
- Advanced sensors and monitoring devices for real-time air quality data
- Ambient air monitoring equipment
- Fuel vapor control systems
- Data analytics and AI to process pollution data
- Continuous emissions monitoring systems
- Remote sensing technologies
- Inspection, adjustment, maintenance, and repair services
- Methane Leak Detection and Repair (LDAR)
Air Pollution Monitoring and Instrumentation: Over the past decade, the Chinese government has implemented numerous nationwide pollution standards and control measures including the Air Pollution Prevention and Control Action Plan from 2013 to 2017 and the Three-Year Action Plan to Win the Battle for a Blue Sky from 2018 to 2020. These plans require the development of a series of ambient air monitoring networks and should yield opportunities for U.S. air pollution monitoring and instrumentation companies. China’s National Environmental Monitoring Centre, a public institution directly affiliated with the state’s Ministry of Ecology and Environment, functions to help monitor the national environment, develop environmental monitoring technology, disseminate monitoring information, and inform reports and technical support for national environmental management and decision-making.
Key technologies and services in demand include:
- Advanced sensors and monitoring devices for real-time air quality data
- Ambient air monitoring equipment
- Data analytics and AI to process pollution data
- Continuous emissions monitoring systems
- Remote sensing technologies
- Inspection, adjustment, maintenance, and repair services
Carbon Capture and Storage: To achieve its dual carbon goal, China launched an Action Plan for Synergizing the Reduction of Pollution and Carbon Emissions in June 2022, which emphasizes the importance of controlling fossil fuels and source pollution. Additionally, the Chinese government helped stand up three commercial carbon capture and storage facilities (CCS), including Asia’s largest coal-power plant CCS facility, the first offshore CO2 storage facility, and a carbon capture facility at an oil refinery. China currently hosts 11 operating carbon capture facilities and its first commercial scale, 109 km long CO2 transport pipeline. In January 2022, China launched the world’s largest carbon trading market, which presents significant opportunities for U.S. companies involved in carbon trading and emissions reduction.
Key technologies and services in demand include:
- Carbon capture technologies for hard-to-abate emissions
- CO2 transportation pipelines and infrastructure
- Emission reduction technologies
- Combustion systems
- Flue gas treatment systems
- CO2 utilization and removal technologies
- Compression equipment
- Geological storage technologies
- Engineering, procurement, and construction of carbon management projects
- Membrane separation technologies
- Carbon data and analytics
- Carbon trading services
- Carbon credit aggregators – companies that aggregate carbon credits from multiple sources and facilitate their sale on the market. The People’s Bank of China provides support through the carbon emission reduction facility (CERF), and has a targeting re-lending quota for the clean, efficient use of coal. The CERF is not capped, while the re-lending quota is currently USD $42 billion. The CERF supports clean energy, energy conservation, and environmental protection projects, as well as carbon reduction technology.
Waste Management and Recycling
Municipal Waste Disposal: China’s rapid urbanization over the past four decades has led to a significant increase in the production of municipal solid waste and related growth in demand for disposal services. The output of municipal solid waste reached 242 million tons in 2020, an increase from a reported 8.17 million tons in 2008. Municipal waste disposal has become an increasingly severe challenge and China has heavily relied on incineration to help combat the increasing production of solid waste. The majority of new trash incineration plants have been built in wealthy coastal provinces where China’s urban population is concentrated, so future opportunities for interior and rural waste disposal remain. The pace of expansion in trash incineration has exceeded the domestic industry’s ability to safely and effectively handle the byproducts of trash incineration such as fly ash, furnace slag, and other toxic pollutants.
Key technologies and services in demand include:
- Construction waste utilization
- In-situ mine tailings and coal gangue filling
- Fly ash disposal and utilization
- Phosphogypsum and red mud disposal
- Smelt metal residue and chemicals residue storage infrastructure and transportation
Hazardous Waste Management: China’s overall hazardous waste output has exponentially increased in recent years, with Sichuan University projecting that China will reach 157.89 million tons per year by 2023, which is a 43% increase from 2017 levels. The past few years have seen increased attention from both the public and the government to address hazardous waste issues, as disposal capacity has yet to catch up to output. Since the Chinese government revised its Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes in 2020, the government has stepped-up reporting on and enforcement of hazardous waste management violations.
Key technologies and services in demand include:
- Hazardous waste disposal technologies
Recycling Management: China has had limited success expanding recycling of municipal waste. Despite trash sorting campaigns launched by the government beginning in 2017, the level of public awareness remains low, and post-sorting recombination remains a significant problem. In 2018, China introduced the Operational National Sword Policy in order to reduce the volume and contamination rates of recyclable materials that China imports for reprocessing. As a result, China has greatly reduced its waste imports by as much as 92% in some waste categories. For U.S. environmental technologies, the introduction of the National Sword Policy highlights the massive opportunity and domestic need for China to increase its recycling infrastructure and divert waste from landfills.
Key technologies and services in demand include:
- Metal and paper waste sorting, processing, and recycling
- Inter-company and inter-industry closed circuit recycling
Water and Wastewater Treatment
Municipal Water Treatment and Infrastructure: China hosts nearly 20% of the world’s population but possesses less than six percent of the world’s total water resources. What water it does have is unevenly distributed, with northern China being more arid and prone to water shortages. Rapid urbanization and industrialization further challenge water quality and availability. China is working to address these challenges, including through the 14th edition of its Five-Year-Plan, which commits to reduce water consumption per unit of GDP by 16%, outlines efforts to pursue water-use efficiency in agricultural, industrial, and urban settings, and sets targets of reaching 25% water reuse for cities facing water scarcity. In 2023, the Government of China allocated $3.6 billion in special funds to address water pollution.
Wastewater Treatment and Sanitation Services: As of 2022, China’s wastewater treatment plants treated wastewater for 98% of municipalities and 45% of rural areas, indicating a need to build out wastewater treatment infrastructure outside of major cities. China’s 14th edition of its Five-Year-Plan sets targets of treating 90% of urban sludge for cities at prefecture level (an administrative division ranking below a province and above a county) and above. China plans to build or renovate 80,000 km of sewage collection pipeline networks in the next few years, in addition to building out wastewater treatment facilities.
Key technologies and services in demand include:
- Smart water technologies including smart sensors, data analytics, solutions for water quality monitoring, leak detection, and infrastructure management.
- Point-of-use ion exchange and reverse osmosis for residential-scale systems
- Municipal wastewater treatment solutions
- Sewage pipeline maintenance
- Black and odorous water bodies treatment
- Sludge treatment: technologies for reducing water content in sludge, environment-friendly chemicals, high automation blending and injection equipment, and cost-effective and energy-efficient incineration technologies
- Engineering, procurement, and construction services (especially for wastewater treatment infrastructure in third- and second-tier cities)
Industrial Wastewater Treatment: In 2022, China’s national sewage discharge was estimated at nearly 63 billion cubic meters. Industrial wastewater is a significant source of wastewater in China, estimated at 20-25 billion tons per year. Based on data collected from European research firm Statista, approximately 3.77 billion yuan was invested in China in 2022 to treat wastewater pollution caused by industrial production. China’s 14th edition of its Five-Year-Plan requires key industrial sectors – such as the petrochemicals, iron, and steel industries – to increase wastewater resource recovery rates and reduce the amount of water consumed for production purposes by 2025. China also considers industrial wastewater recycling as a key part of promoting increased use of “unconventional” water sources to address water security and supply issues in China.
Key technologies and services in demand include:
- Industrial wastewater treatment solutions for heavy-polluting industries, including textiles, printing, steel production, oil and gas extraction, coal mining, and pharmaceutical production
- Innovative solutions for treating mixed wastewater streams in industrial parks
- Solutions for zero-liquid discharge
- Reverse osmosis, electrochemical technologies, ion exchange resins, advanced oxidation processes, and brine concentration solutions
Water Efficiency and Reuse: China is also prioritizing water conservation and working to improve water reuse rates. In 2022, China launched pilot projects across 19 cities to send treated sewage wastewater to purify in artificial wetlands before being reused in other applications, such as fish farming. From 2020-2025, China’s newly built, renovated, and expanded reclaimed water production capacity should reach at least 15 million cubic meters per day. Further demonstrating the level of importance the Chinese government places on improving water quality and reuse, China’s Ministry of Ecology and Environment allocated approximately USD $2.6 billion in funding for special water pollution control projects in 2022, also encouraging financial institutions to provide more support for these types of projects. China has also recognized that it needs to reduce water loss from leakages in its water supply infrastructure, and is seeking smart water systems to monitor and detect leaks in pipes. Sensors are also important for monitoring water quality in rivers and other sources and for detecting illegal industrial sewage discharge.
Key technologies and services in demand include:
- Wastewater reclamation and reuse solutions, including innovative solutions to treat mixed wastewater streams at industrial parks
- Solutions for water efficiency and water conservation
- Smart water monitoring, including for reducing water loss and leakages from pipes
Market Challenges
Intellectual Property Protection: While it has made some progress in improving intellectual property (IP) laws and regulations, China remains a difficult market for protecting and enforcing IP rights. Some companies experience pressure to share trade secrets, specific technology, or sensitive data. U.S. small- and medium-sized enterprises, in particular, should be aware that a U.S. trademark or patent registration is not sufficient to protect their IP in China. For companies entering the Chinese market, it is essential to have an effective IP protection strategy in place. See the STOPfakes China IPR Toolkit for additional information and guidance.
Legal Barriers and Regulatory Complexity: Multiple administrative bodies at all levels of government can issue orders to enforce regulations in China. The lack of regulatory clarity has undermined business confidence. As a result, U.S. exporters must invest significant time and financial resources to track and interpret all regulatory documents to ensure compliance.
Political Tensions: China has a goal of achieving leadership in various emerging technology fields by 2030 and seeks to acquire and use technology to advance its national goals, including through technology transfers and intelligence gathering. Tensions between the United States and China have resulted in tariffs, sanctions, and lowered business confidence among U.S. companies operating in China, deterring some U.S. companies from doing business in China. However, recent high-level U.S. government visits to China – including Secretary Blinken, Secretary Yellen, and Secretary Raimondo – led to increased bilateral communications and culminated in a November 2023 summit between President Biden and President Xi, which focused on better managing competition and stabilizing overall U.S.-China relations.
Localization Policies: China is striving to realize economic self-reliance and promote indigenous innovation. Programs to reach this objective include Made in China 2025 (published in 2015) and the 14th edition of the Five-Year Plan (published in 2021). These policies aim to replace foreign technologies, products, and services in China with local products and solutions. This trend is already impacting China’s environmental technologies sector, with domestic products becoming more sophisticated and competitive due to subsidies and other incentives. U.S. exporters often need to offer specific products for niche markets to compete effectively in this more challenging environment.
Importance of Trusted Local Partners: U.S. exporters need to invest time and resources to understand the needs and complexities of the local Chinese market and offer appropriate solutions. For U.S. businesses, it is very important to find suitable partners to set up pilot or demonstration projects in China to demonstrate viable offerings. An increased presence at trade shows and various workshops and seminars increases the credibility of U.S. exporters in China and can significantly aid efforts to find appropriate partners.
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Environmental Technologies Industry Resources
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