Check on China: A water play

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Mark Twain used to have a saying about the quest for water sources during the pioneer days of the Wild West: “Whisky is for drinking while water is for fighting over!” In the case of China, though, the writer’s adage could now easily be: “Water is for investing.”  

China is spending billions to prevent a water shortage crisis brought on by its scarce natural endowment, with the deficiencies made worse by its phenomenal economic growth and terrible pollution. While it ranks sixth in the world in terms of total water resources (with around 2,805 billion cubic meters), China’s per capita water resources are only 28% of the world’s average and among the lowest 13 countries in the world.

The shortages are even more overwhelming when considering how much is actually usable.

According to the Chinese Ministry of Water Resources, only slightly more than a third of the 2,805 billion cubic meters of water are utilizable. In fact, 400 of China's more than 600 cities lack water, 110 of which are in particularly short supply. Pollution has made the situation worse, with close to two thirds of China’s drinking ground water quality severely contaminated. Considering that Chinese water consumption is growing at around 10% a year, the country definitely has staggering water problems.

To address these challenges, the Chinese government is going on a major water spending spree. Between 2006 and 2010, it plans to spend around RMB 1,000 (US$133 billion) to build sewage pipes and new waste treatment and water supply facilities. The result, of course, are major investment opportunities.

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