Water Utilities Market "Scarce Resources, Many Competitors" E20 Xue Tao: The era of water utilities development dominated by "fighting for territory" has ended

Jing Daily Beijing, March 26 (Reporter Li Biao) On March 26, at the “2026 (24th) Water Industry Strategy Forum” hosted by the E20 Environment Platform, discussions within the industry on the evolution of the water affairs sector and future growth paths were underway. The “scale expansion” development model appears to be collectively being abandoned by water companies.

Zhang Lizhen, Deputy Director of the National Environmental Protection Technology Management and Assessment Engineering Technology Center, introduced that 2026 is a year with special significance. We are at the historical intersection between the closing of the “14th Five-Year Plan” and the start of the “15th Five-Year Plan,” and we are also in a critical period of profound reshaping of China’s water industry. The complex and ever-changing external environment, along with in-depth adjustments to internal structures, is pushing the industry to shift from past scale expansion toward value deepening centered on “intelligent industry enabling.” Low-carbon transformation, improved quality and efficiency, integrated systems governance, and digital-intelligent convergence are redefining the underlying logic and development path of the water industry.

In response, Ma Yuntong, Senior Vice President of Beijing Enterprises Water Group Co., Ltd., said that the entire industry has already entered the deep-water area of existing stock. A specific manifestation is that the pace of releasing incremental scale has dropped off a cliff. Compared with the “13th Five-Year Plan” period, during the “14th Five-Year Plan” period, for every business segment—whether it is pipeline networks, wastewater, or sludge—the percentage of the downward reduction in the speed of incremental release could exceed 50%. Therefore, the traditional model of scale expansion with heavy asset investment can be said to have become difficult to sustain.

Meanwhile, at the forum, Xue Tao, Managing Partner of the E20 Environment Platform and Executive Dean of the Research Institute, pointed out that the era of water development led by large-scale construction or “race to grab land” has already ended. In recent years, the municipal wastewater marketization rate has generally remained stable, but there may be differences in perception across different regions.

Xue Tao further stated that local governments in first- and second-tier cities are gradually reclaiming their concession rights, while in third- and fourth-tier cities, concession rights are still being released due to fiscal pressure; some cities are in an intermediate state—although their fiscal conditions are still acceptable, they choose to extend concession periods out of consideration for debt reduction. Therefore, the current municipal wastewater marketization rate is actually the result of the interplay and balance of the above multiple forces. Moreover, the municipal wastewater marketization rate basically remains within a stable range of normalization.

“Over recent years, the number of concession projects newly released by the water market has indeed decreased, and companies competing for projects in the market have accordingly also decreased. Overall, the water market still shows a ‘porridge is scarce and monks are many’ situation—that is the situation reflected in our data. What is even more worrying is that in recent years, most of the local governments willing to release water concession projects have poor location conditions; even if they put them out, it’s not necessarily that someone will take them up,” Xue Tao said.

So where is the industry’s way out? In response, Xue Tao told a reporter from Economic Daily: For scale expansion, most water companies have been relatively cautious. Now, within the water industry, companies are exploring certain development paths, and there are some case studies of transformation and development, but it is still difficult to compare them with the previous conventional models.

2026 (24th) Water Industry Strategy Forum现场 每经记者 李彪 摄