Water supply and sanitation in the People's Republic of China

Source: World Bank 2007, p. 108

It should be noted that implicitly, according to this estimate, the level of self-financing by water and wastewater utilities is zero. Nevertheless there clearly will be an upward pressure on tariffs, since 70-80% of water infrastructure and 50-60% of wastewater infrastructure is financed either through debt or private equity that requires a remuneration. The remainder is financed through municipal equity, which typically requires no remuneration and thus helps to keep tariffs low. The major international financial institutions engaged in the sector are the World Bank, the Asian Development Bank and the Japanese Bank for International Cooperation (JBIC). Their total share in sector financing is only 5-10%.

Direct debt financing by local government is not allowed in China. However, local-government owned companies can and do contract debt on a large scale. Another mechanism to use debt finance are BOTs which are a popular financing mechanism for water and wastewater treatment plants and bulk water supply systems in China. Under BOTs private entities undertake investments and recover their costs through fees for bulk water sale or wastewater treatment charged to the utilities. While the government is formally not indebted, the charges for the services are de facto similar to debt service charges.

Rural areas In terms of rural and small town infrastructure, channeling funds to the final users through the various layers of local government remains a challenge. According to the magazine The Economist "some provinces are now bypassing both the prefectural- and township-level governments in order to get funds more directly to rural areas." [ "Missing the barefoot doctors", The Economist, October 13 2007, p. 30 ]

See also

*Water resources of China
*China water crisis
*Water supply in Hong Kong

External links

* [http://www.mwr.gov.cn/english/ Ministry of Water Resources]
* [http://www.adb.org/Publications/product.asp?sku=0040V&p=mltdoc ADB: China’s Water Challenge]

Key sources and further reading

* [http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/09/25/000310607_20070925111156/Rendered/PDF/409640P0704130Public.pdf Stepping up - Improving the performance of China's urban water utilities] by Greg Browder et al., World Bank 2007
* Fu, Tao, Miao Chang and Lijin Zhong: Reform of China's Urban Water Sector, International Water Association and Water Policy Research Center of Tsinghua University 2008, ISBN 1843391430
* [http://lnweb18.worldbank.org/ESSD/ardext.nsf/18ByDocName/China-CountryWaterResourcesAssistanceStrategy103KB/$FILE/ChinaCountryWaterResourcesAssistanceStrategy.pdf World Bank Country Water Resources Assistance Strategy 2002]

References