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The Asian side of the world

Jean-François Sabouret

Part two. National challenges and their strategies to overcome them

The Chinese urban water supply and the role of foreign companies

Delphine Spicq

Texte intégral

1September 2009

2The environment often makes the headlines in China these days, especially matters concerning water shortage or pollution problems. Water is an important issue in the Middle Kingdom, as it is badly needed for economic development, but also because China’s water situation is somewhat paradoxical. The overall data for the country is rather positive, but rainfall differs across the country. It is very scarce in the northeast provinces (Qinghai and Xinjiang, where there is between 25 and 50mm of rainfall per year), low in the north up to the Yangtze River, yet very high in the south, particularly in the southeast (2,000mm per year). Moreover, there is much rainfall in certain months of the year and this varies considerably from one year to another. When compared to the ratio of the population, these resources are somewhat insufficient and put a strain on China in terms of its water problems (1,700m3 /year/inhabitant), as figures sometimes fall as low as 1,800m3/year/inhabitant.

3Faced with these difficulties, the securing of water resources to ensure a regular supply to cities has been and continues to be the priority. Westerners had put the first modern water supply systems that replaced traditional methods, in which water taken from various rivers was filtered, boiled and then stored for future use, in place at the end of the 19th century. Concessionary ports opened where foreigners traded and settled permanently and were the first to set up this kind of modern supply in China. Shanghai was the first to create water systems in 1883 that operated internationally. A few years later, other urban cities, such as the English territory (1897), the Chinese city of Tianjin, other foreign territories of this city (1900), and Shanghai (1905) established their own waterworks. From 1905 to 1915, most of the ports that were open had also set up modern water-supply systems: Canton (Guangzhou) and Chengdu in 1906, Beijing and Hankou in 1908 and 1909 respectively. Finally, other major Chinese cities set up such systems between 1915 and 1930, Kunming in 1915 and Suzhou a few years later. Thus, by the beginning of the 1930s, most large Chinese cities were well equipped with waterworks, while towns and villages still used the traditional supply system and only had access to limited quantities of water that was often poor in quality.

4The systems that were installed were standard at the time and similar to those used in the West (water clarification with sand filters, a slow filtration process, adding chlorine and stored in a water tank or reservoir). The majority had been installed and were operated by Westerners who had mastered the technology and imported all the material that was not available in China at the time from their native countries. Westerners often funded the projects; the Chinese investment capacity was insufficient. Projects were entirely devised and implemented by Westerners through private companies, which were granted plots of land for the supply of water to the city’s residents. There are a few exceptions, such as the Beijing waterworks company, financed, created and operated by the Chinese alone, but still dependent on imported Western technology and materials.

5Secondly, from 1950 onwards, after the founding of the People’s Republic of China and throughout the decade, modern water supply was extended to all medium and small sized towns under the supervision of civil and hydraulic engineers educated in the West, such as Liu Fuzhi (1904-1955). Liu was born in a small village near Xi’an, in the Shaanxi province, in the northwest of China. He was awarded a Master’s degree in Civil Engineering at Cornell University and then worked for the water filtration specialist, professor and engineer, Allan Hazen, before completing further training at the University of Karlsruhe, where he studied under Theodor Rehbock (1864-1950), a specialist of water supply and hydraulic construction. Back in China, he was employed by the Tianjin ji’an zilaishui gongsi, Tianjin’s main waterworks company. He quickly became the chief engineer. After 1949, he was in charge of improving and modernising the city’s water supply, which was badly damaged in the Second World War and the Civil War that followed, a task he achieved with great success. His expertise and hard-working attitude were widely sought after to install water-supply systems across the country. The waterworks that he produced at the time were true technological achievements, as China was closed off to the world, and foreign materials or technology could not be imported. All the necessary equipment thus had to be designed and produced in China, often under difficult circumstances. Liu’s technical knowledge and inventiveness, however, managed to meet the challenges. In addition, he trained a whole generation of hydraulic engineers and technicians, who quickly succeeded him, as he died suddenly from cancer in the mid 1950s. These men were in charge of the water-supply systems throughout the Maoist period and the first decades of the reform up until 1995. Year in and year out, with poor financial and technical means, they managed to maintain a reasonable quality of water and to regularly increase the supply to match the rate of consumption and continued growth. The latter, linked to the increase in population and economic development, became substantial from 1978 onwards and at the beginning of the reforms, and then increased in the mid 1990s. As a consequence, existing systems had to be extended and modernised for the first time since the 1980s.

6From the middle of the 1990s onwards, these old and outdated supply systems needed replacing, extending and modernising to meet the soaring demand. A new wave of modernisation thus began. This time foreign companies were called upon for both financial and technical assistance. Leading international companies in the water market, such as Véolia (the former Compagnie Générale des Eaux, later Vivendi, a specialist company in water supply and treatment as well as waste disposal); Suez (formerly Lyonnaise des Eaux, also specialised in water treatment and waste disposal); Degrémont, a subsidiary company of the Suez Group and which specialises in water production plants; Saur (formerly belonging to Bouygues) and Thames Water, the first British water company, bought and managed several water production plants. Véolia, the first worldwide water treatment company, working on five continents, has signed 23 contracts since 1997 to operate water supply companies in major Chinese cities such as Changzhou, Chengdu, Hohhot, Kunming, Lanzhou, Tianjin, Shenzhen and Yangzhou.

7This new intrusion of foreigners into the management of public service may seem surprising at first, but this can be easily explained, as the Chinese central state and local governments do not have the sufficient financial capacity or the know-how to proceed with the necessary investment to modernise and develop water supply plants and networks. There are many reasons for this, namely the low price paid by customers for water.

8China still faces technological backwardness in water treatment and production, and has had to resort to consulting leading foreign groups specialised in the field. These international companies can provide the best and most up-to-date equipment along with the latest innovations for a competitive price. However, the resurfacing of foreigners in the domain of water supply and the management of public services is being challenged, like at the beginning of the 20th century when Westerners owned and managed water companies in China. Even today, many Chinese people feel bitter about the delegation of a public service to foreign companies, partly because this means that the population’s welfare depends on private companies, whose main goal is to maximise its profit, and, moreover, whose foreign nationality reduces the control over a vital resource – water – not to mention the fact that this process strengthens the gradual foreign intrusion into the Chinese economy. One has to keep in mind, however, that law regulates the activities of foreign companies in China, and the Chinese central government also keeps a hold over the decisions made concerning this important resource. In addition, the Chinese economy cannot but resort to foreign companies to assist in its modernisation, a fact that does not seem to pose a problem in itself. The issue is rather the role that the government plays in this process. How will it manage to organise the activities of international businesses without discouraging them from investing in China?

9Let’s take the example of the price of water. Using foreign capital comes with a catch; investments have to appear profitable enough in the long run, so that international groups will find it worthwhile to invest. An attractive return on investment means a substantial increase of the price of water. Chinese citizens pay on average only 1.4 yuan (0.14€) for a cubic meter of water, whereas the average price in Europe for the same amount is 1.50€ (German prices are the highest at 1.91€ and French prices the lowest at 1.27€), which could provoke social problems. Water prices have risen recently and this has received much resentment from many people who have shared this through the press. This opposition has not been repressed by the authorities for the time being, but the question is whether the latter will be able to contain this in a peaceful manner or whether, in another scenario, they will go backwards and increase the price of water over a longer period for foreign companies and thus envisage a lower profitability in investment in China, with the risk of breaking signed contracts.

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