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

Basing on Beijing, March 26 (China Economic Daily, reporter Li Biao) On March 26, at the “2026 (24th) Water Industry Strategy Forum” hosted by the E20 Environmental Platform, discussions within the industry about the evolution of the water affairs sector and future growth paths are unfolding in the industry, and the “scale expansion” development model appears to be collectively being abandoned by water utilities.

Zhang Lizhen, Deputy Director of the National Engineering Technology Center for Environmental Protection Technology Management and Assessment, said that 2026 is a year of special significance. We are standing at a historical intersection between the closing of the 14th Five-Year Plan and the opening of the 15th Five-Year Plan, and we are also in a critical period for the profound reshaping of China’s water utilities industry. The complex and changeable 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 empowerment.” Low-carbon transition, improving quality and efficiency, systems-based governance, and digital-analytics integration are redefining the underlying logic and development path of the water utilities 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 zone of stock. The specific manifestation is that the pace of releasing incremental scale has fallen off a cliff. Compared with the “13th Five-Year Plan” period, during the “14th Five-Year Plan” period, no matter whether it is pipe network wastewater or sludge, the proportion of downward adjustment in the pace of incremental releases across different business segments may exceed 50%. So, the traditional model of large-scale heavy-asset expansion should be said to be no longer sustainable.

Meanwhile, at the forum, Xue Tao, Executive Partner and Executive Dean of the E20 Environmental Platform Research Institute, pointed out that the era of water utilities development led by large-scale construction or “grabbing territory” has ended. In recent years, the municipal wastewater marketization rate has generally remained stable, but perceptions may differ across different regions.

Xue Tao further said that local governments in first- and second-tier cities are gradually reclaiming concession rights, while in third- and fourth-tier cities, due to fiscal pressure, concession rights are still being released. Some other cities are in a middle state: although their fiscal conditions are still acceptable, for the purpose of deleveraging and managing debt, they choose to extend concession periods. Therefore, the current municipal wastewater marketization rate is in fact the result of multiple forces interwoven and balanced, and the municipal wastewater marketization rate basically remains in a stable, normal range.

“Over recent years, the number of concession projects newly released in the water utilities market has indeed decreased, and the companies competing for projects in the market have also correspondingly decreased. Overall, the water utilities market still shows a situation of ‘too little porridge and too many monks’—this is what our data reflects. What is even more troubling is that in recent years, the places that are willing to release concession projects for the water utilities sector have mostly poorer location conditions. Even if they are put out, it is not necessarily that anyone will take them over,” Xue Tao said.

So where does the industry’s way forward lie? In response, Xue Tao told a reporter from the China Economic Daily: For scale expansion, most water utilities companies are showing relatively cautious behavior. At present, companies in the water utilities industry are exploring some development paths, and there are cases of transformation and development, but it is still very difficult to compare them with the previous conventional model.

Site of the 2026 (24th) Water Industry Strategy Forum Photo by Li Biao, China Economic Daily reporter