At the beginning of 2026, the traditional municipal and housing construction markets continued to contract, with pressure on cash collection and difficulty in finding growth opportunities. The entire industry was asking the same question: Where is the next certain long-term growth track?

The answer became clear in spring. The National Development and Reform Commission, the Ministry of Water Resources, the Ministry of Finance, and the Ministry of Housing and Urban-Rural Development simultaneously issued detailed implementation rules: from 2026 to 2030, the cumulative total investment in water conservancy nationwide will exceed 7 trillion yuan, an increase of over 23% compared to the 5.68 trillion yuan during the 14th Five-Year Plan period, with an average annual fixed construction investment steadily maintained at over 1.3 trillion yuan. The modern water network has been listed as the top of the six strategic infrastructure networks, officially kicking off a golden ten-year upward cycle.

"Four types of funds for precise and targeted support"

The 7 trillion yuan investment in water conservancy is a rigid task in the country's medium- and long-term water security strategy. The four ministries have a clear division of responsibilities: the National Development and Reform Commission is responsible for overall project approval, the Ministry of Water Resources leads the construction, the Ministry of Finance is responsible for issuing special bonds and special treasury bond quotas, and the Ministry of Housing and Urban-Rural Development facilitates the interconnection between urban water supply and drainage systems and the backbone water network.

Ultra-long-term special treasury bonds, central budgetary investments, special water conservancy bonds, and green credit loans are all targeted towards water conservancy. The proportion of special water conservancy bonds in infrastructure special bonds has increased to 20%-25%. The proportion of special bonds used as project capital has been relaxed, and the central government provides subsidies of up to 80% for pure public welfare projects in the western and northeastern regions. As of the first quarter of 2026, 15 major water conservancy projects have been newly initiated nationwide, with a total investment of 207 billion yuan.

Identify opportunities in different regions

The 7 trillion yuan investment will be allocated based on water resource gaps and regional strategic gradients. The North China Plain and the Yellow River Basin in the north will account for over 30% of the investment, focusing on subsequent projects of the South-to-North Water Diversion and large-scale regulation and storage reservoirs. The main force will be top central and state-owned enterprises, with local urban investment companies undertaking branch pipeline networks. The areas along the Yangtze River and the major grain-producing regions in central China will prioritize flood control and farmland water conservancy projects. The 13 major grain-producing provinces in central China will invest over 250 billion yuan in supporting projects over the next five years. In the southwest, Sichuan, Chongqing, Yunnan, Guizhou, and Guangxi will advance the construction of the Pinglu Canal, the Long March Canal, and numerous small and medium-sized village and town water supply projects. With low entry thresholds, small and medium-sized construction enterprises have the greatest potential. The eastern coastal bay areas will shift their investment towards seawall reinforcement, drainage improvement, and smart water management, ensuring optimal payment stability.

Avoid internal competition and find your niche

Inter-basin backbone hub projects are restricted to top central and state-owned enterprises such as Sinohydro and Power Construction Corporation of China. The large and medium-sized irrigation area renovation projects, which are numerous and decentralized to cities and counties, represent a core dividend for county urban investment and small and medium-sized construction enterprises. Urban and rural water supply and flood control and drainage projects provide stable cash flow, making them suitable for long-term self-sustaining urban investment. Basin ecological restoration can be bundled with cultural tourism revenue for packaging and financing. The five-year investment in smart water conservancy infrastructure is expected to exceed one trillion yuan, directly benefiting information service providers and equipment manufacturers.

Two major risks: insufficient fiscal support in central and western counties, and long payment collection cycles, requiring verification of local fiscal capacity before bidding; rapid updates in smart water conservancy standards, leaving those with outdated technology out of the game.

The implementation of 7 trillion yuan of water conservancy investment marks the complete departure of the 14th Five-Year Plan for infrastructure construction from the traditional path of housing construction. This round of construction is tied to the three major strategies of water security, food security, and ecological security, and there is no uncertainty in policy continuity. Leveraging local resources and fully understanding the rules for special bond applications is to seize the greatest deterministic dividend of this round. Edited by Yang Beihua