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

Beijing, March 26 (Daily Economic News) (Reporter Li Biao) On March 26, at the “2026 (24th) Water Industry Strategic Forum,” hosted by the E20 Environment Platform, discussions surrounding the evolution of the water services industry and future growth paths were underway across the industry, and the “scale expansion” development model appears to be collectively being abandoned by water utilities.

Zhang Lizhen, Deputy Director of the National Environmental Protection Technology Management and Assessment Engineering Technology Center, said that 2026 is a year of special significance. We are at a historical convergence point between the end of the “14th Five-Year Plan” and the start of the “15th Five-Year Plan,” and we are also in a critical period when China’s water utilities industry is being profoundly reshaped. A complicated and ever-changing external environment, along with deep adjustments in internal structure, is pushing the industry to shift from the past mode of scale expansion to value-focused cultivation centered on “intelligent value-creation.” Low-carbon transition, improving quality and efficiency, systematic governance, and the fusion of digital and intelligent technologies 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 whole industry has already entered the phase of deep water in the stock market—specifically, the speed at which incremental scale is released has fallen off a cliff. Compared with the “13th Five-Year Plan” period, during the “14th Five-Year Plan” period, whether it is pipeline networks for wastewater or sludge, the potential decline in the release speed of incremental volumes across various business segments may exceed 50%. Therefore, the traditional model of heavy-asset scale expansion, it should be said, is already hard to sustain.

Meanwhile, at the forum, Xue Tao, Executive Partner and Executive Dean of the Research Institute at the E20 Environment Platform, pointed out that the era of water utility development led by large-scale construction or “carpet-bagging” is already over. In recent years, the municipal wastewater marketization rate overall has remained stable, though there may be differences in perceptions across different regions.

Xue Tao further said that local governments in first- and second-tier cities are gradually reclaiming their concession rights, while in third- and fourth-tier cities, due to fiscal pressure, concession rights are still being released. Some cities are in an intermediate state: although their financial situation is still acceptable, they choose to extend concession rights for reasons related to debt reduction. Therefore, the current municipal wastewater marketization rate is actually the result of the balancing and interweaving of multiple forces mentioned above, and the municipal wastewater marketization rate basically remains within a stable, normalized range.

“Over recent years, the number of concession projects newly released in the water utilities market has indeed decreased, and the number of companies competing to secure projects in the market has correspondingly declined. Overall, the water utilities market is still exhibiting a ‘thin porridge and many monks’ situation—that is what our data reflects. What is even more worrying is that, in recent years, most of the localities willing to release water utilities concession projects have relatively poor location conditions, and even if they are put on the table, it doesn’t necessarily mean someone will take them over,” Xue Tao said.

So where is the way out for the industry? In response, Xue Tao told reporters from the “Daily Economic News” that regarding scale expansion, most water utilities companies are showing relatively cautious behavior. Now, companies in the water utilities industry are exploring certain development paths, and there are some cases of transformation-driven development, but it is still very difficult to compare them with the previous conventional models.

2026 (24th) Water Industry Strategic Forum site Photo by Li Biao, Daily Economic News reporter