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 (Covering Reporter Li Biao) On March 26, at the “2026 (the 24th) Water Industry Strategy Forum,” hosted by the E20 Environment Platform, discussions within the industry centered on the evolution of the water services sector and future growth paths, 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 standing at the 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 of profound reshaping of China’s water services industry. The complex and ever-changing external environment, along with deep adjustments to internal structures, are driving the industry to shift from past scale expansion toward value deepening with “intelligent and value-added empowerment” as the core. Low-carbon transition, improving quality and efficiency, system-level governance, and the integration of digital and intelligent technologies are redefining the underlying logic and development path of the water services industry.

In response, Ma Yuntong, Senior Vice President of Beijing Enterprises Water Group Co., Ltd., said that the whole industry has already entered a deep-water zone of existing capacity. A specific manifestation is that the speed of releasing incremental scale has fallen off a cliff. Compared with the period of the “14th Five-Year Plan,” during the “13th Five-Year Plan,” no matter whether it is pipelines for wastewater or sludge, the percentage by which the speed of incremental release in each business segment declines may exceed 50%. Therefore, the traditional model of heavy-asset scale expansion can, it should be said, no longer be sustained.

At the same time, at the forum site, Xue Tao, Executive Partner of the E20 Environment Platform and Executive Dean of its Research Institute, pointed out that an era of water services development led by large-scale construction or “flooding the territory” has 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 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 cities are in an intermediate state. Although their fiscal conditions are still acceptable, they extend concession rights in order to take debt-repayment considerations into account. Therefore, the current municipal wastewater marketization rate is actually the result of the interplay and balance of the aforementioned multiple forces, and the municipal wastewater marketization rate overall basically remains in a stable, normal range.

“In recent years, there has indeed been a reduction in newly released concession projects in the water services market, and companies competing to secure projects accordingly decrease as well. Overall, the water services market still shows a ‘porridge is scarce and monks are many’ situation—this is what our data reflects. Even more worrying is that in recent years, most local governments willing to release water services concession projects have relatively poor location conditions; even if they are put out, it’s not necessarily that anyone will take them over,” Xue Tao said.

So where is the industry’s way forward? In response, Xue Tao told a reporter from the Economic Daily News: For scale expansion, most water utilities have been relatively cautious. Now, in the water services industry, companies are exploring certain development paths; there are some examples of transformation and development, but it is still hard to compare them with the previous conventional model.

2026 (24th Water Industry Strategy Forum) Site photo by Li Biao for Economic Daily News