China’s Water Affair Report

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The year of 2005 is quite important for China water affair to step towards marketlization.Chinese government takes water price reformation as one of the three ma jor price reformation projects.As waste treatment fee came into collection and the water resource fee was improved in 2004 then in 2005 the water price in main cities rose a lot，which beyond people’s expectation.In around 2005，the increaserate of water price in major cities of China，especially in Beijing and Shenzhen etc.，the waste treatment fee increased by over 50%.During the“Eleventh Five-Year”period（2006-2010），the water price may continue to rise by 50%~100%.Suchnation-wide rise in water price boosts an advancement of water affair towards marketlization.

China is now speeding up the pace of city-building；meanwhile，the income level of city residents are improving constantly，which have become the Long-term driving forces of water affair development.In addition，some monopoly industries，including water industry，are gradually opened up to the social capital and a seriesof favorable policies are enforced to ensure the successful marketlization of water affair.Private capitals now enter the water market.Along with the document issue of Execute Water Price Reformation and Promote Water Saving by China State Council，the price of water supply in cities and the waste treatment fee will be rationally adjusted to ensure the daily operation of the enterprises and to well-balance theirprofit.The reformation on water price also lays good foundation for investment into water industry.

In 2006，the direction of water marketlization reformation is clear and definite.The water market is gradually opened，and the overall framework of franchising operation and government supervision system is to be enhanced. Naturally not only positive factors may act，but also negative factors such as fierce competition，capital operation risk and investment risk may have profound effect on the development of China’s water industry.Up till now China has been the member of WTO for 4 years and with the further open of China market，foreign capital will speed up into China’s water industry.It is now a real challenge for domestic water companies to win the competition against the foreign rivals.