3-3 Promoting Development of China's Environmental Protection Equipment Manufacturing Industry and Management Capacity Project Scope and Relationship to China's Agenda 21 1. Background The sustained development of China's industries should be based on the continuous rational exploitation of resources and should result in a favourable ecological environment. To achieve this, environmental protection equipment is indispensable for the control of pollution, the treatment of waste materials and the recovery of resources. The environmental protection industry needs to rely on the support of environmental protection technology and equipment. Without advanced environmental protection technology and equipment, there will be no basis for the environmental protection industry. Therefore, development of China's environmental protection equipment manufacturing industry and management capacity building is a major component of the strategy for sustainable development. At present, China is faced with the difficult task of prevention and control of industrial pollution and the protection of the urban environment. Therefore, China urgently needs to develop environmental protection technology and equipment. Since the commencement of reforms and openness, China has attached special importance to the work of environmental protection and has a very high demand for environmental protection equipment. This provides a significant potential for the development of environmental protection equipment. China's environmental protection equipment manufacturing industry trails behind that of developed countries. At present, the variety, quality and efficiency of environmental equipment does not meet market needs, and the production cost of equipment is high. Therefore, it is necessary to introduce and absorb advanced, international technologies and expertise through joint ventures and other types of business arrangements and funding mechanisms. The development of the industry would not only benefit China, but would also contribute to global environmental protection efforts. Priority tasks to be addressed in this Project include: the development of China's environmental equipment manufacturing industry to provide high quality, efficient, and cost effective technologies for the domestic market; management capacity building; the establishment of quality certification standards; and an information service. In the past decade, the Ministry of Machine Building Industry has issued the Sixth, Seventh and Eighth Five-Year Plans for the development of environmental protection equipment and it is now formulating the Ninth Five-Year Plan. During this period, it has carried out extensive investigations regarding domestic and international environmental protection equipment. China's environmental protection equipment manufacturing industry has begun to emerge. However, it can not yet compete with international standards. The annual output value of China's present environmental protection equipment industry is approximately US $500 million. China has more than 1,800 enterprises producing environmental protection equipment. The majority are small and over 80 percent are township enterprises, with inadequate manufacturing technology and equipment. Returns are poor, and quality and range of products are inadequate. In order to accelerate the development and production of China's environmental protection equipment, it is necessary to import advanced international technology as well as management techniques and expertise, establish a data base, and an environmental protection equipment standard and quality control system. Therefore, the assistance of the international community is needed to provide technology and funds for the promotion of China's environmental protection equipment manufacturing industry and management capacity building. 2. Objectives Long-term Objectives Establish an effective trade management and information service system for China's existing environmental protection equipment manufacturing industries; provide reliable technology and equipment for environmental demonstration projects; develop highly efficient environmental protection equipment; restrict and eliminate obsolete products; and promote the development, production and sales of environmental protection equipment through market mechanisms. Immediate Objectives Perform market research. Formulate a plan and implementation programme for the development of environmental protection equipment. Establish China's environmental protection technology and equipment data base and consulting services information system. Establish China's environmental protection technology and equipment standard system, including the drafting of basic standards for the classification of environmental protection equipment; the formulation of guidelines for equipment manufacture so as to promote standardization, serialization, compatibility and complete ranges of products while improving the quality level. Establish a quality monitoring system for China's environmental protection equipment and technical training center. The center will investigate evaluation methods and performance indicators for environmental protection equipment, establish a central quality control institution and monitoring stations in key areas, and implement technical training, cooperation and information exchange between China and other countries. 3. Activities 3.1 Market survey and demand prediction of China's environmental protection equipment, including: Examine the short, medium and long term impacts of economic, social and technological factors on the market demands for environmental protection equipment. Evaluate market trends for environmental protection equipment and forecast directions for technological development. Select 5 to 10 major product groups for market forecasting, including: - Atmospheric pollution control equipment; - Waste water treatment equipment; - Solid waste treatment and recycling equipment; - Noise and vibration control equipment; - Environmental monitoring instruments and equipment. Evaluate proposals for the development of China's environmental protection equipment: - Priority should be given to the development of environmental protection equipment; - Equipment that cause serious environmental pollution should be discontinued and included in the list of banned products published by the Ministry of Machine Building Industry. Evaluate proposals for importing technology and equipment and provide recommendations. The duration of this activity is 30 months. 3.2 Plan and implement China's environmental protection equipment strategy: Conduct studies of China's environmental protection equipment, appraise current technology and infrastructure facilities, develop capabilities and quality assurance in major facilities; evaluate technology standards, production capacities, and compare domestic and international equipment. Examine the impact of policies, regulations and standards on the supply and demand of environmental equipment, on the use of waste material and on energy conservation in the development of China's environmental protection equipment manufacturing industry. Provide a report highlighting the forecasted development of China's environmental protection equipment manufacturing industry from 1995-2005, identifying equipment which should be developed and assigned manufacturing priority, and propose a corresponding budget. Encourage environmental protection industries to formulate internal business development plans. The duration of this activity is 42 months. 3.3 Develop China's environmental protection technology and equipment data base and consulting service, including four subsidiary data bases engaged with products and technology, manufacturers, scientific and technological achievements, and foreign technology transfer. Develop a technological data base of domestic environmental protection equipment. Develop a manufacturers data base identifying product sources and ranges. Develop a data base of recent research and development on environmental protection equipment to include institutions and synopsis of results. Develop a data base and search system of foreign environmental protection equipment and manufacturers. Interface the environmental protection technology and equipment data base with China's sustainable development network (SDN). The duration of this activity is 54 months. 3.4 Develop China's environmental protection technology and equipment standard system. Establish a environmental protection equipment technical assistance center and train technical management personnel. Establish technical guidelines and criteria to formulate standards for environmental protection equipment which would meet international standards (ISO). Formulate standards for environmental protection equipment, to include: - Evaluation Parameters; - Minimum performance/manufacturing standards; - QA/QC; - Standards for performance testing. ormulate, disseminate and enforce environmental equipment standards. The duration of this activity is 30 months. 3.5 Establish supervision, management and quality control system for China's environmental protection equipment industry: Establish China's environmental protection equipment, supervision, management and quality monitoring center. Establishing quality testing stations for environmental protection equipment. Establish environmental protection equipment evaluation and training centers for quality testing personnel. Train personnel in domestic and international testing techniques and standards. The duration of this activity is 42 months. This project will be implemented by the Ministry of Machinery Industry and the National Environmental Protection Agency. 4. Inputs The total investment for this project is US $2 million of which half shall be sought from international sources. 4.1 Chinese Inputs Office facilities and equipment expenses (US$ 300,000). - Office space and auxiliary facilities. Instrument and equipment expenses (US$ 500,000). - Computer data processing equipment; - Environmental protection equipment quality monitoring instruments and equipment. Materials and information expenses (US$ 200,000). - Information and statistics materials relating to environmental science, environmental protection technology and environmental protection equipment; - Environmental protection technology and information materials in international projects obtainable in China. 4.2 International Inputs Foreign consultant expenses (US$ 160,000). - Four foreign experts will be invited annually over five years, total 20 persons. Instrument and equipment expenses (US$ 500,000). - Computer data information processing equipment; - Environmental protection equipment quality and properties monitoring instruments, laboratory equipment. Material and information expenses (US$ 140,000). - Information on environmental protection technology, equipment and clean production technology from developed countries; - MIS software for environmental protection equipment and manufacturers in developed countries; - International environmental protection equipment product and testing standards. Personnel training expenses (US$ 200,000). - Training of managerial and technical personnel. 4.3 Budgets The various implementation expenses and fund distribution listed in the following tables: Table 1. Budget by Item (in million US dollars) Item Chinese Input External Input Grant Soft-loan Total Foreign expert 0.16 0.16 Office facilities 0.30 0.30 Instrument and equipment 0.50 0.40 0.10 1.00 Material and information 0.20 0.14 0.34 Personal training 0.20 0.20 Total 1.00 0.90 0.10 2.00 Table 2. Budget (in million US dollars) Activity Chinese Input External Input Total 3.1 0.10 0.10 0.20 3.2 0.10 0.05 0.15 3.3 0.30 0.40 0.70 3.4 0.20 0.05 0.25 3.5 0.30 0.40 0.70 Total 1.00 1.00 2.00 5. Benefits Supported by the project, China's environmental protection equipment manufacturing industry will develop considerably in structural, managerial and technical terms. The project will also assist in increasing the current operational productivity of environmental protection equipment which could reduce redundant investments by as much as US$ 1.2 billion annually. 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