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    Where to go, the Environmental PPP : Zhao Lijun Spots Green Wisdom from Xiongan New Area


    On May 3rd, China Environmental Technology Conference 2017 was held in Shanghai at the same period with IE expo. Mr. Zhao Lijun, President of China Environmental Chamber of Commerce (CECC) and Chairman & CEO of Poten Environment Group Co., Ltd. (hereinafter referred to as “Poten Enviro”) attended and addressed the opening ceremony, voicing his hope that “IE expo will become the world’s largest environmental fair and the world-class environmental companies emerge in China”. On the conference, he also made a speech titled “It’s high time to set sail” and shared his ideas on the innovation of integrated environmental service mode.

    Below are the key points extracted from his speech.

    1.It’s high time to set sail. 

    When it comes to how the environmental protection industry is developing now, I want to describe it with an oft-cited poem line from Tang Dynasty, that is, “it’s high time to set sail”. The whole sentence is “High tide at both banks are extravagant, a wind sail hangs”, which means “from shore to shore it is wide at high tide, and before fair wind a sail is lifting and now it’s time for sailing.”

    Today, the development of environment industry is driven by policy and social participation. But this industry needs to take more responsibilities. As the responsibilities, environment industry is facing more challenges with the requirement from policy and the public to the environment improvement. We need to take more responsibilities than ever before.

    2. Nature of PPP Model

    At present, the public-private partnership (PPP) model has generated the most headlines in river and regional improvement. But what is the Nature of PPP model?  When the term of “Public-Private Partnership” was introduced into China from abroad Private was understood as the private capital imported to public service. However, in western countries, [景芳1] “Private” means “private agencies” or “professional companies”. The Chinese definition obviously prioritizes its capital attribute over its agency attribute. Hence, the model in China has shifted its focus to identifying those who own more money and whose money is cheaper, thus deviating from the correct direction.

    The word “Professional” is much closer to the nature of “Private”. By saying that, we mean to have professional agencies with quality services. If we return to the ultimate pursuit of PPP and take the perspective of Chinese people—the final users of public products, PPP should be designed to seek for delivering better services at lower cost. But if only lower cost is considered, debts directly issued by government organs are indeed cheaper than private funds. So this reveals a better practice that government organs provide more cost-efficient funds and professional companies render higher-quality services.

    3. Green wisdom spotted from Xiongan New Area

    What does the PPP market look like now? According to the data released on ccgp.gov.cn and its equivalents in all Chinese provinces (municipalities directly under the central government), China saw 1,401 PPP projects clinching their deal in 2016, which involved RMB2.35 trillion. But a close look at the figures will find that among all types of bidder winners, state-owned enterprises and non-listed companies accounted for 74% of the total bidding price. Furthermore, all large and medium-sized projects went to state-owned enterprises and central enterprises. As for the PPP projects relating to environmental protection, most of them involve large-scaled engineering construction and it still remains to be seen whether these efforts can produce effect as expected.

    From the environmental service point of view, the Xiong’an New Area has been assigned with seven key tasks, two of which are building green smart new town and creating beautiful ecological environment. 

    To create a beautiful ecology, we draw up a blueprint where water and towns are integrated with blue and green elements interwoven together. To beat this goal, our environmental management needs to be backed up with green wisdom which manifests itself as data support, systematic administration and intelligent control. If we take into account how such factors as seasons affect environment capacity, we will be able to put every source of pollution under effective control and on this basis, manage regional environment in an optimal way. Only with the environmental quality protected effectively, can people live in a beautiful environment.  

    The realization of such a goal requires us to change our policies and treatment mindsets in earnest. The growth of environmental protection sector must return to the reliance on the essence of the industry. Otherwise, we can achieve nothing but a bustling environmental protection campaign under the whip of this array of policies. 

    4.Where does the environmental industry go?

    The development of any industry needs to go through a process of growth, evolution and integration. Under the new mode of regions and rivers, we will ride on tides and change with times so as to adapt ourselves to the growth of the entire society, instead of reinforcing the inherent order. The upcoming social trend that centers on distributed management, decentration and self-organization will definitely reshape the industry sector. 

    For us, the current problem is that many large companies already involved in environmental protection demonstrate inadequate professionalism in specific domains while a large number of small and medium-sized environmental enterprises haven’t fully unleashed their professional strength due to such factors as capital barrier. Although weak in force, these small companies that maintain the craftsmanship are crucial to the development of the sector. 

    What do the prospects of the industry look like from the perspective of decentration? We could create a good platform so environmental service providers, both large and small, can have better opportunities to render the public with more targeted and premium services in a brand new industry ecology.

    Now the Ministry of Environmental Protection has proactively put forward the objectives of setting up a smart management platform. But in my opinion, this doesn’t mean we have to center our efforts around the government. Instead, we should do more to unlock the strength of market. After hitting the market, the platform shouldn’t be reduced to an interactive platform that pivots on some large company. In the future, any industry based on Internet technology will have to go through the process of decentration.

    What I just shared did not necessarily mean a correct answer. They are just my reflections on the current state of the environmental industry. I believe everyone is smarter. With our joint efforts, I’m convinced that the future of the environmental industry will be beyond the sky.

    Source: News Center of the Strategic Development Department of the Group



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