Water Management in China

Chi­na is fac­ing an enor­mous chal­lenge. As strong as nowhere else, its urban pop­u­la­tion has grown rapid­ly over the past 35 years. At the begin­ning of the 1980s, about 20% of the Chi­nese pop­u­la­tion still lived in the cities. Today it is already over 50%. In anoth­er 15 years, the share could even rise to 70%. The rea­sons for this are the state sub­si­dies for eco­nom­ic growth and con­sump­tion, which will allow urban­iza­tion to progress even faster in the future. It is esti­mat­ed that water demand will increase by 70–100% between 2005 and 2025, depend­ing on the urban­iza­tion mod­el. How­ev­er, the water sup­ply and the water infra­struc­ture in Chi­na are still con­sid­er­ably under­fund­ed. But that is no sur­prise. Chi­na’s four-decade eco­nom­ic boom has exact­ed a pun­ish­ing price on the envi­ron­ment. Round about 20% of the world’s pop­u­la­tion lives in Chi­na, but the coun­try itself has only 3% of its water resources. Con­sid­er­ing this, Chi­na is going to depend on an effi­cient water and waste water man­age­ment. This not only because of eco­nom­ic fac­tors but also because of polit­i­cal fac­tors. In order to secure its pow­er, The Com­mu­nist Par­ty of Chi­na would prob­a­bly nev­er allow any water dis­rup­tions or a wors­en­ing of the water man­age­ment which could con­se­quent­ly lead to tur­moil in the cities.

Five-Year Plan as a Clue for massive Water Investments in the coming Years

The lack of water, espe­cial­ly of clean, drink­able water, is increas­ing­ly becom­ing a seri­ous prob­lem for the Chi­nese econ­o­my. Chi­na faces a huge water prob­lem and as nowhere else, water has become a polit­i­cal fac­tor for the coun­try. How­ev­er, this prob­lem has part­ly been rec­og­nized by the Chi­nese author­i­ties for some years, which has made secur­ing water and sus­tain­able water sup­ply one of the key objec­tives of their five-year plan in 2016. In this 13th five-year plan, the gov­ern­ment has allo­cat­ed RMB 559 bil­lion, a total 0.75% of its whole GDP to the water treat­ment indus­try. Even though this might sound more than enough to tack­le water issues across the coun­try, it prob­a­bly won’t be. More than 30 per­cent of the rivers and more than 50 per­cent of the drink­ing water would not meet nation­al qual­i­ty stan­dards, accord­ing to Chi­na’s Min­istry of Envi­ron­men­tal Pro­tec­tion. In August 2013, water sam­ples were tak­en from the Yangtze Riv­er and the Yel­low Riv­er. These sam­ples showed a 50 per­cent excess of mer­cury and an exces­sive arsenic share of 36.4 per­cent. Fur­ther­more, it was shown that of 1,200 state-con­trolled rivers, 850 are pol­lut­ed. Of the 4,929 ground­wa­ter sta­tions sur­veyed in 198 Chi­nese cities, 57.3 per­cent had “bad” or “very poor” water qual­i­ty. The rea­son for this is the unfil­tered indus­tri­al waste­water, which seep into the ground­wa­ter.

Although the 12th five-year plan had been drawn up by the Chi­nese gov­ern­ment stat­ing that a total of RMB 450 bil­lion was meant to be invest­ed in the purifi­ca­tion of waste­water by 2015, it is esti­mat­ed that still up to 80 per­cent of the unpu­ri­fied waste­water comes in con­tact with the so called clean water. Fur­ther­more, it is believed that 86 per­cent of the rivers flow­ing through cities are pol­lut­ed. The drink­ing water sit­u­a­tion in Chi­na is there­fore also becom­ing increas­ing­ly alarm­ing. 82 per­cent of Chi­nese peo­ple source most of their drink­ing water from wells or fresh­wa­ter lakes, but 3 out of 4 such sources are seri­ous­ly pol­lut­ed with bac­te­ria and only one in ten Chi­nese receive their drink­ing water from a source which meets the water stan­dards.
Addi­tion­al water and san­i­ta­tion infra­struc­ture and waste­water treat­ment plants are urgent­ly need­ed. How­ev­er, exist­ing and cur­rent invest­ment in water and waste­water treat­ment infra­struc­ture can­not keep pace with the pace of urban­iza­tion. Anoth­er impor­tant and cru­cial point is that half of all major Chi­nese cities have not yet reached the state qual­i­ty stan­dards for drink­ing water. In the long-term, this can lead to enor­mous poten­tial for Chi­nese water stocks, espe­cial­ly as the Chi­nese water infra­struc­ture is still in its infan­cy.