Turning Waste Into Wealth: Chinese Firms Are Expanding Into Southeast Asia

In 2018, China enacted the Operation National Sword policy, banning 24 categories of imported solid waste and dramatically tightening contamination thresholds for recyclable imports.

Beyond the global recycling dynamics, a quieter industrial transformation is unfolding: China’s domestic waste-to-energy (WtE) sector, once driven by fierce growth at home, is increasingly expanding into Southeast Asia. Rather than a simple export of surplus capacity, this outward movement signals a structural shift in how urban environmental governance is financed and delivered in the region, with Chinese firms assuming functions traditionally held by municipal authorities.

China’s WtE capacity dwarfs that of other Asian countries. According to Statista, China accounted for the largest share of municipal waste-to-energy capacity on the continent in 2024, contributing substantially to Asia’s total installed base. A Financial Times analysis found that China built over 1,000 WtE plants to tackle domestic waste challenges. As domestic growth opportunities slow due to saturation, waste sorting policies, and diminishing waste streams, leading Chinese environmental firms are looking outward.

Southeast Asia presents an urgent and expanding need. Rapid urbanisation and rising consumption have produced sharp increases in municipal solid waste, putting pressure on landfills and public health systems. Countries such as Thailand are among the world’s highest generators of municipal waste per capita. Thailand’s municipal solid waste generation rate stood at approximately 1.15 kg per person per day in 2024. Yet, despite the volume, most waste in the region is still managed through landfilling, open dumping, or informal methods. This reflects weak infrastructure and regulatory gaps.

This expansion is not merely market-driven. It resonates with the priorities articulated in the  ASEAN-China Environmental Cooperation Strategy and Action Plan 2021-2025, which identifies “sustainable cities” as a core area for collaborative capacity building and policy dialogue. Within the broader Green Silk Road initiative, WtE infrastructure has gained traction as a focus of state-supported international cooperation and technology exchange.

Chinese WtE firms are moving to fill this infrastructure gap. As of mid-2025, Chinese companies had invested, constructed and operated more than 43 overseas WtE projects in 13 countries, with a design treatment capacity of approximately 57,700 tonnes per day and total disclosed investment of around USD6.43 billion. Vietnam hosts the largest number of these projects in Southeast Asia, followed by Thailand and Indonesia.

This expansion is not simply about capital chasing returns; it reflects a deeper redistribution of governance roles. In cities where waste collection systems are fragmented and technical capacity is limited, long-term Build-Operate-Transfer (BOT) WtE concessions effectively place critical waste handling and energy generation functions in the hands of private firms. For example, China Everbright Environment operates the Phu Son WtE plan in Hue, Vietnam and Zheneng Jinjiang has a WtE project in Palembang, Indonesia. Unlike short-term equipment supply contracts, these projects often entail multi-decade operational commitments, integrating Chinese firms into the daily infrastructure of host cities.

The broader implication is that waste management — once an exclusively domestic public service — is becoming an arena of transnational service provision and infrastructure governance.

A prime example is the Can Tho Waste-to-Energy Plant in Vietnam, developed by China Everbright Environment. Operational since 2018, it processes 400 tonnes of household waste daily, roughly 70 per cent of the city’s total. The facility generates approximately 60 million kWh of green electricity annually. Such projects not only reduce reliance on landfill disposal but also contribute to local grids. This frames WtE facilities as semi-public service providers rather than mere industrial investors.

A key reason Chinese firms can operate effectively in this space is technological adaptation. Southeast Asian waste streams, which are typically high in moisture and low in calorific value, pose challenges for many conventional incineration systems. Chinese WtE technology have  advanced mechanical grate furnaces with extended drying zones and AI-driven combustion control, coupled to circulating fluidised bed (CFB) systems. This technology has been honed in similar domestic conditions and is therefore particularly well suited to these material profiles. This gives Chinese companies a genuine competitive advantage over foreign competitors whose systems are optimised for segregated, higher-calorific waste.

Furthermore, the synergistic ‘Government-Enterprise-Finance’ model developed in China’s domestic market provides these firms with a competitive edge in project financing and integrated operations. By leveraging diverse revenue streams — such as Feed-in Tariffs (FiT) for electricity and staggered service fees — Chinese firms offer a financially viable solution that aligns with the fiscal realities of host countries.

Crucially, Chinese firms are addressing concerns about environmental standards by adopting rigorous ESG frameworks. Contrary to the perception that they export lower standards, market leaders like Everbright and Shanghai SUS Environment typically design their overseas plants to comply with the EU Industrial Emissions Directive (2010/75/EU) — the EU’s key legislation on industrial pollution control that sets stringent emission limits based on Best Available Techniques (BAT). By adhering to these European standards, Chinese firms seek to legitimise their presence and mitigate “Not In My Backyard” (NIMBY) sentiments.

However, governance risks persist and could undermine the long-term sustainability of these arrangements. At the contractual level, the financial viability of some Chinese WtE projects relies on “put-or-pay” agreements, under which municipal or provincial authorities guarantee to deliver a minimum volume of waste and pay the tipping fee for that amount, even if the actual waste delivered is lower. This creates a potential “lock-in” effect that may conflict with future recycling goals. If a city successfully reduces waste generation or increases recycling, it may still be contractually obligated to pay the full tipping fee based on the guaranteed volume, resulting in a fiscal burden. These economic rigidities are compounded by broader social tensions, as public opposition to incineration remains common across Southeast Asia, driven by health concerns and a lack of trust in foreign investors and local regulatory enforcement. Ultimately, in a region marked by political transitions and evolving environmental regimes, these multi-decade commitments expose both Chinese capital and local governments to unpredictable policy shifts.

The broader implication is that waste management — once an exclusively domestic public service — is becoming an arena of transnational service provision and infrastructure governance. Chinese WtE firms are not simply exporting technology; they are shaping how cities in Southeast Asia solve persistent environmental problems. To achieve sustainable impact, Chinese firms should evolve to become trusted partners capable of aligning with local regulatory frameworks and engaging communities transparently. They would need to open plants for public visits and education, establish clear grievance mechanisms, share real-time emission data, and support local waste reduction initiatives. Only then can the promise of turning waste into wealth translate into durable environmental governance outcomes rather than short-term commercial gains.

2026/98