After pouring 17 trillion RMB into environmental protection, is the industry actually cooling down? The truth is heartbreaking.

Introduction: In June 2026, the China Environmental Protection Industry Association released the 'China Environmental Protection Industry Development Report (2025)' at the Eighth Conference on Innovation and Development of Eco-Environmental Protection Industries. Based on a sample of nearly 25,000 enterprises nationwide, the report presents a thought-provoking set of figures: industry revenue has remained stable at the 2-trillion-RMB level for four consecutive years, reaching approximately 2.17 trillion RMB in 2024—yet it declined slightly by 2.3% year-on-year. While overall scale remains intact, growth has turned negative—not a sign of recession, but rather an indicator of an industrial cycle shift. China’s environmental protection industry is transitioning from a 'scale-driven growth' model to a new 'quality-and-efficiency-oriented' phase characterized by systematization, refinement, and digital intelligence. [3] Keywords: #EnvironmentalProtection #EnvironmentalIndustry I. The Foundation: A 'Slight Retreat' atop the 2-Trillion-RMB Base Three signals merit attention: First, the 'ballast stone' remains firm—but the logic of growth has changed. The three traditional sectors—solid waste management, water services, and air pollution control—still account for over 90% of total revenue; however, growth has shifted from 'building new capacity' to 'upgrading existing infrastructure and improving operational efficiency'. Second, service-oriented transformation has become the main engine. The share of environmental services has surpassed 65%, signaling a strategic pivot in value creation—from selling equipment and undertaking engineering projects toward long-term operation and service provision. Third, concentration among industry leaders has intensified sharply. Just 26.3% of large- and medium-sized enterprises capture 97.4% of total revenue, while the remaining over 70% of firms compete for less than 3% of the market—a classic 'pre-consolidation' structure. II. Policy Support: Four Major Institutional Dividends Concentrated in 2026 2026 marks both the concluding year of the 14th Five-Year Plan and the inaugural year of the 15th Five-Year Plan—making it historically unprecedented in terms of policy density. ① Legal Foundation: Implementation of the 'Ecological Environment Code'. On March 12, 2026, the Fourth Session of the 14th National People’s Congress approved the 'People’s Republic of China Ecological Environment Code', effective August 15, 2026 (National Ecological Day). This is China’s second law named a 'Code'—after the Civil Code—and the world’s first comprehensive code dedicated to 'ecological environment'. Comprising five parts, 1,242 articles, and roughly 160,000 characters, it integrates ten existing laws—including the Environmental Protection Law, Air Pollution Prevention and Control Law, Water Pollution Prevention and Control Law, Soil Pollution Prevention and Control Law, Solid Waste Pollution Environment Prevention and Control Law, Noise Pollution Prevention and Control Law, Marine Environmental Protection Law, Environmental Impact Assessment Law, Radioactive Pollution Prevention and Control Law, and Clean Production Promotion Law—all of which will be repealed upon the Code’s entry into force. Its core innovation lies in ending fragmented legislation and, for the first time, dedicating an entire part to green, low-carbon development—thereby institutionalizing carbon peak and carbon neutrality goals within the legal framework. ② Target-Driven Planning: The '15th Five-Year Plan for Building a Beautiful China'. Issued by the State Council, this plan sets key targets for 2030 and outlines seven priority areas, 28 major initiatives, and 20 flagship projects—including enhanced atmospheric pollution control, water ecosystem governance and restoration, upgrading hazardous waste treatment facilities, coordinated management of emerging pollutants, and digitalized greenhouse gas emission management. ③ Standards-Driven Pressure: Simultaneous tightening of emissions standards and energy efficiency standards.

In Q3, the environmental protection industry’s performance deteriorated again!

By Q3, this issue remained unresolved. According to a sampling survey conducted by the Guangdong Provincial Environmental Protection Industry Association, 56.2% of enterprises still reported continuously rising accounts receivable balances; 57.5% experienced extended payment cycles for their receivables; and as many as 64.4% stated that delayed payments had severely impacted their normal operations. From Guangdong’s perspective, the problem of delayed payments has not eased—it has instead deepened further. The China Environmental News also pointed out that accounts receivable issues have become a widespread challenge facing environmental enterprises, and the recently released Q3 financial reports of A-share environmental listed companies once again confirm this reality. 3 Pandemic-induced industry consolidation and special treasury bond issuance—will recovery follow? With continued pressure on corporate performance and persistent challenges, what does the future hold for the environmental protection industry? Firms themselves appear pessimistic. According to the same Guangdong association survey, when asked about full-year 2023 revenue forecasts for their respective subsectors, respondents predicted year-on-year growth, stability, or decline at rates of 21.9%, 32.9%, and 45.2%, respectively. ▼ Forecasted full-year 2023 revenue performance of environmental enterprises. Source: Guangdong Environmental Protection Industry Association In other words, only 21.9% of enterprises anticipate revenue growth in 2023, while a striking 45.2% expect a decline. However, analysts suggest firms need not be overly pessimistic: with pandemic-related disruptions fading and local government debt resolution measures gradually taking effect, the valuation of environmental protection enterprises may recover upward in Q4. Huachuang Securities noted that, with the rollout of policies—including special treasury bonds, local debt resolution initiatives, and the resumption of the Certified Emission Reduction (CCER) program—the performance of some listed environmental enterprises could achieve high growth against a low base, potentially triggering a re-rating in Q4. Take special treasury bonds as an example: on October 24, the Sixth Session of the Standing Committee of the 14th National People’s Congress approved the State Council’s proposal to issue additional 2023 national treasury bonds and adjust the central budget for 2023. The central government will issue an additional 1 trillion RMB in national treasury bonds in Q4 2023, managed as special treasury bonds. ▼ Source: Xinhua News Agency Shi Yinghua, Director of the Macroeconomic Research Center at the Chinese Academy of Fiscal Sciences, stated: 'Although the central government is issuing additional treasury bonds, all funds will be allocated to local governments—helping alleviate local fiscal revenue-expenditure pressures, optimizing the structure of fiscal spending, and improving debt composition.' At the time, the 'Environmental Industry Circle' observed that the central government’s issuance of 1 trillion RMB in special treasury bonds—though primarily earmarked for disaster prevention and mitigation—indirectly enhances local governments’ payment capacity, thereby alleviating accounts receivable pressures faced by environmental enterprises (see related article: 'Is relief for accounts receivable coming? 1 trillion RMB in special treasury bonds to be issued in Q4!'). Additionally, local debt resolution measures are underway: on July 24, the Political Bureau of the CPC Central Committee convened a meeting emphasizing effective prevention and resolution of local government debt risks and the formulation and implementation of a comprehensive debt resolution package. On August 28, the Fifth Session of the Standing Committee of the 14th National People’s Congress reviewed the 'State Council Report on Budget Execution Since the Beginning of This Year', reiterating the need to formulate and implement a comprehensive debt resolution package to prevent and mitigate local government debt risks.

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