Business Opportunities in the Environment Encouraged by China’s Economic Stimulus Programs for Foreign Companies and Procedure for Implementation

Brief Introduction

In order to address the international financial crisis, since the second half of 2008, the Chinese government has launched a series of economic stimulation plans, among which the most important ones are the RMB 4 Trillion Investment Plan and the Revitalization Plan for Ten Industries. These plans are important measures aiming to secure economic growth, expand domestic demand and adjust industry structure. As for the environment protection industry, the economic crisis has provided a golden opportunity. On one hand, one of the countercyclical macroeconomic policies is that the government increases its investments in public works. To avoid a competition between government investments and private enterprises and prevent the government from entering competitive industries, the government should be more careful when pouring its investments in the areas characterized with public goods as well the areas where a market failure exists. The environment protection industry is the industry with certain kind of market failure. On the other hand, the Chinese government expects to take this opportunity to optimize industry structure and upgrade technologies, which also presents a better opportunity for foreign investors to enter into the environment protection industry.

Therefore we may find opportunities to enter into the environment protection industry of China through judging the effectiveness of the government’s macroeconomic policies and carefully analyzing the economic stimulation plans and environment protection policies.

In such context, under the commission of the Environmental Policy Program of GTZ, this report mainly analyzes the opportunities that the RMB 4 Trillion Investment Plan and the Revitalization Plan for Ten Industries among the other economic stimulation plans of China may bring to foreign enterprises to enter into the environment protection industry, and the normal procedure for foreign enterprises to participate in the projects of the Chinese government namely, introduction to the procedure of bid invitation and tendering. Specifically, this report mainly consists of the following three parts: first, introduction to the economic stimulation plans of China and their implementation, analysis on the commercial opportunities related to environment protection that the economic stimulation plans may bring to foreign enterprises, among which opportunity analysis is a key point including quantitative analysis and qualitative analysis; second, analysis on the procedure of implementing the economic stimulation plans, including not only the introduction to fundraising and project implementation but also the analysis on the procedure of bid invitation and tendering in government projects as well the bid invitation rules under the economic stimulation plans; in the conclusion part, on one hand, the opportunities for foreign environment protection enterprises to enter into the industry of China are summarized; on the other hand, useful suggestions for such enterprises to enter into the industry of China are proposed. In addition, this report lists the entire Catalogue for the Guidance of Foreign Investment Industries (amended in 2007) in the appendix hereto.