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August 8th, 2017
Via Future Directions International, a report on China’s water industry:
For some time now, the issue of water security in China has been of extreme concern to its government, international NGOs and the international community. China itself contains the second-largest number of people living without regular access to safe drinking water, second only to India, and despite containing around 20 per cent of the world’s population, only holds about seven per cent of its water. As terrifying figures such as these become more prevalent, global encouragement for governments to increase their environmental awareness is greater than ever before, and expectations are rapidly mounting for change. China’s response has largely come in the form of policy, with three major policies regarding China’s water pollution problem produced in the past three years alone. This new focus on the environment also reflects increased pressure on the Chinese Communist Party (CCP) from grassroots organisations and individuals to take action, especially through the medium of social media. China has set out realistic objectives within the aforementioned policy papers, using the opportunity to prove it possesses both the political will and regulatory frameworks to begin taking the issue of water pollution more seriously. Most recently, it has announced the addition of 430 billion Yuan ($84.5 billion) dedicated to 4,800 separate projects aimed at improving the quality of its water supply. The Ministry for Environmental Protection has already allocated 13 billion Yuan ($2.6 billion) this year towards various projects with no specific time frame for completion and, with the vast remainder of the funds still to be spent, the remaining funds could be allocated to any number of policy initiatives currently underway.
Comment
The new focus on climate and pollution in China has been a long time coming, with the twelfth and thirteenth Five Year Plans both taking a strong focus on managing China’s environmental issues. One excellent example is the national emissions trading schemeannounced during Xi Jinping’s visit to the United States in September 2015, which had been a long-term effort that finally came to fruition after policy testing in a number of provinces across China. In regard to water pollution, China’s announcement of its “Most Stringent Water Management System” three years ago set in action the “Three Red Lines” that became China’s national water use quotas for 2015, 2020 and 2030. These important goals, among other efforts, aim to cap annual maximum water use at 700 billion cubic metres, which is an ambitious but achievable goal. In recent years, fears that these goals may not be met due to urban expansion outpacing improvements in the water supply systems have been expressed by some scholars, while inadequate investment in the improvement of water access to the rural population have been of great concern to others. The 430 billion Yuan recently allocated to the improvement of China’s water supplies may put such concerns to rest, reflecting the more proactive role the CCP has been taking in environmental policy in recent years.
According to the Ministry of Environmental Protection, the 13 billion Yuan of funds already allocated from the total 430 billion Yuan will go towards cleaning up Liujiaxia Reservoir in Gansu Province and Sanxian Lake in Hunan Province. The rest of the money will likely be used to safeguard the remaining clean rivers and lakes, protect drinking water sources from contamination, prevent pollution in major basins, and groundwater protection, though nothing is set in stone yet. Of course, most of the money is likely to be invested in large organisations already well known in the wastewater management industry. Morgan Stanley recently predicted that three companies: Beijing Enterprises Water, which is state-owned and already one of the biggest wastewater management companies in the industry; Guangdong Investment, which primarily treats the water of Hong Kong and has considerable experience in the industry; and Beijing Origin Water, are most likely to be awarded government contracts. While this kind of investment is likely to dominate expenditure for the most part, other initiatives may also attract funds. China’s “Sponge Cities” programme, which aims to enable cities to more effectively deal with flooding while also conserving water for purification, and Managed Aquifer Recharge, which aims to replenish groundwater, are both likely to receive some attention.
With China finally appearing to put its money where its mouth is when it comes to environmental protection, the recently announced 430 billion Yuan is likely to improve the dire state of China’s water supply. Being a country that is severely water insecure, the investment in water and its associated industries is set to increase dramatically in the near future. China Water Risk have predicted that another four trillion Yuan of investment is expected on water infrastructure, with a further two trillion Yuan devoted to combating water pollution, simultaneously stating it is likely that the government will relax public investment over time in favour of private investment taking on the burden of ensuring water security. This approach, with the innovative private sector under instruction of government directives, is highly likely to create positive future change.