The coming of the 2008 Olympic Games to China and the 2010 Expo Shanghai have pulled foreign giants into a booming environment protection industry in the country.

Official sources have revealed that China will invest US$85 billion altogether in the environmental protection sector during the 10th Five-year Plan period (2001-05).

As the government has vowed the two international events in Beijing and Shanghai will be green, environmental protection projects and necessary renovation could offer great opportunities for firms in the sector.

In line with the nation's commitments to the World Trade Organization, tariffs for environmental protection products, such as catalytic agents in garbage treatment and water treatment agents, are to be reduced from the current 13.4 per cent to 6.9 per cent by 2008.

"(The above elements) prompt foreign businesses to actively seek opportunities in China," said Pan Yue, deputy director of the State Environmental Protection Administration.

Italian companies have taken the lead thanks to governmental support, with the State Environmental Protection Administration of China and the Environment and Land Ministry of Italy putting forward an environmental protection co-operation framework agreement in 2002.

The framework agreement, involving a combined investment of 100 million euros (US$123.28 million), concerns projects in high-efficiency energy, natural resource protection, and building an environmental appraisal and inspection system for the Games and the Shanghai Expo.

So far, Italian companies have inked five Green Olympics contracts with the Beijing municipal government, including 300 natural gas engines, auto emissions purification equipment, an intellectual environment inspection system and a medical waste incinerator.

The municipal government says the 300 natural gas engines project is sponsored by Nanjing Iveko, a Sino-Italian joint venture, and is to be completed by the end of this year.

Italian firms are also trying to play an active role in the 2010 Expo Shanghai China.

Sources close to the Shanghai municipal government said the two sides had not reached any agreement yet, but they were expected to co-operate in the green renovation of the city's 18,000 buses.

French enterprises are eyeing China's water market. Veolia Water, one of the world's leading water companies, is the most vigorous one in China.

In December, it bought a 45 per cent stake of the Shenzhen Water Group for US$400 million, which was the largest property rights purchase involving foreign investment in China in 2003 as well as the largest water project purchase ever in China.

Veolia has just signed a contract with the Beijing municipal government to build one of the facilities to be used during the 2008 Olympics.

The project, a waste water plant, is expected to generate 20 million euros (US$23.99 million) in revenue over the next 20 years.

Veolia Water has also successfully won bids for eight water projects in China so far, with a total investment of 600 million euros (US$744 million).

In line with the target set for the 2008 Olympic Games, the sewage treatment ratio should rise to 90 per cent by 2008 from the current 42 per cent. Beijing will spend 12 billion yuan (US$1.45 billion) on building nine sewage treatment plants and eight recycling water treatment facilities by 2008.

(China Daily 08/02/2004 page10)