Negative influence

The fear is that after purchasing Chinese companies and gaining control of local water resources, international water giants will gain a monopoly position that will allow them to increase prices at will.

Ren Fu, director of water policy research center at Tsinghua University said foreign ownership would put the Chinese government and residents at a disadvantage. High prices and monopolistic operations would have a negative influence on the development of China's urban water supply system.

Chairman of the Chinese Water Association Li Zhendong said: "foreign investors are paying a premium for these companies today, but they will make huge profits in the future, and the Chinese people will end up footing the bill."

The country should be the boss

The entry of foreign capital into the Chinese water market alerted the country to the risks of a foreign takeover of the water supply system, but also to a realization that the Chinese water market needs further development.

In October, 2007, a survey on foreign buyouts of urban water supply projects was jointly launched by the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development. Its report has now been handed to the General Office of the State Council.

Since the beginning of 2008 there have been no further reports of foreign buyouts of water supply companies. Water authorities have stopped accepting buyout offers and it seems that China has called a halt to foreign investment in the Chinese water market.

Liu Zhiqi, deputy secretary of China Water Association said it is wrong to treat water utilities as just another business. The country should be the boss of the water supply market, and should retain a controlling interest in water companies that accept foreign investment.

(China.org.cn by Wu Huanshu, November 4, 2008)