China is the largest clean technology (cleantech) market in the world, with a market value of over $200 billion in environment protection and renewable energy industries alone. Energy generation became the most popular segment of cleantech investment in 2009, followed then by the water and energy efficiency segments.

Chinese government spending on cleantech is snowballing. China has tripled its government investments on cleantech to 1.35 trillion yuan in the past decade, and boosted the share of cleantech spending in gross domestic product (GDP) from 1.3 percent to 1.5 percent.

As for the areas of cleantech investment, $172 billion has gone to environmental protection – 37 billion for desulphurization, 25 billion each for industrial waste water treatment and vehicle exhaust gas, and 22 for municipal waste water treatment.

In the renewable energy sector, $2.8 billion has been invested in wind, $8.1 billion on solar thermal energy, $1.7 billion on solar PV, $3.1 billion on ethanol, and 1.3 billion on biodiesel.

For its Five-Year Plan (2006-2010) period and in the long term, China has set two targets. The first is achieving at least 10 percent of total energy consumption from renewable energies by 2010, and the second is boosting the proportion of renewable energy consumption against primary energy consumption from 10 percent to 16 percent by 2020. Meanwhile, the government wants to reduce energy consumption per 10,000 yuan of GDP by 20 percent. It also seeks to reduce the water consumption per industrial output ratio by 30 percent by 2020.

Specifically, development goals of environmental protection for the 11th Five-Year Plan period are to treat 70 percent of municipal sewage and 60 percent of municipal garbage, discharge 10 percent less primary pollutants, and reach a 20 percent forest coverage.

In view of the current situation, China, however, faces tough challenges ahead, such as high energy consumption and high raw materials consumption. China’s energy consumption per 10,000 yuan of GDP was four times the world average and 14 times that of Japan. Raw material consumption is going up rapidly. In 2005, China consumed 310 million tons of rolled steel, up 15.1 percent year on year; 12.84 million tons of aluminum oxide, up 9.7 percent; and 960 million tons of cement, up 12.4 percent.

High environmental costs are offsetting about 4 to 6 percent of China’s GDP growth, only 43.6 percent of polluted water is treated, and 58.6 percent of Chinese cities have unhealthy air conditions. The continuing rapid growth of the Chinese economy presents unparalleled opportunities and challenges.

Since most of the vast cleantech market in China remains untapped, the country’s policy incentives, such as the latest environment and renewable energy tax, are attracting a lot of investment. Statistics from Cleantech China Research show that cleantech venture capital (VC) grew from a bit over $550 million in 2007 to more than $720 million in 2008, and is expected to reach over billion $dollars in 2009.

What we can see the vast investment would be used to massively expand China’s solar, wind, biofuel, electric car, energy efficiency sectors, carbon capture & store, environment protection and smart-grid markets in a move that could be as groundbreaking as the commercialisation of the internet. China has huge clean energy business opportunities for USA. US clean-energy companies can help Chinese firms meet their enormous energy demands while deploying technology that benefits the environment in the world.