Reports this week that Chinese cities will soon raise water rates will have fallen on welcome ears for those who have been campaigning to preserve the precious little supplies that China has. Campaigners and some journalists argue that higher rates should reflect the scarcity of water in China.
It was also good news for Chinese water companies, such as: Beijing Capital Co. (SH:600008), Jiangxi Hongcheng Waterworks Co. (SH:600461), Wuhan Sanzhen Industrial Holdings (SH:600168) and Nanhai Development Co. (SH: 600323) which all surged to the 10 percent trading cap in the morning session yesterday.
China's water resources are among the world's lowest per capita. Northern China is particularly dry, with water supply of just a quarter of that of southern China.
China population is constantly rising - as has the country's level or urbanization and industrialization. But one of the largest problems has been irrigation pressure to the parch dry farming land on the North China Plain. As the water shortage gets worse, it increasingly threatens China's food security.
The government is already started huge engineering projects to ship water from the Yangtze river in the south up to Yellow River, Beijing and the northern farmlands.
It is a hugely ambitious project (pictured, near Beijing) that has already been delayed until 2014, despite earlier estimates of completion next year. The total budget for the project has been increased to RMB254.6bn. As of the end of June 2009, RMB58.97bn had already been invested in it.
Those companies directly involved in the construction of the project include: China Gezhouba Group Company Limited. (SH: 600068); Anhui Water Resources Development Co. (SH: 600502), which surged to the 10 percent trading cap yestertoday; and Qianjiang Water Resources Development Co. (SH:600283) which climbed 5.45 percent yesterday.
Another problem on top of this is the quality of water. Currently, 28 percent of China's water falls below Grade V, the national standard for farming use, and 79 percent falls below Grade II the minimum standard for daily use, such as drinking.
According to the Ministry of Housing and Urban-rural Development, by the end of March this year, sewage treatment plants are still not available in a quarter of China's cities and 80 percent of county level towns.
The government will certainly invest more on water treatment. Those set to benefit include: Tianjin Capital Environmental Protection Group Company Limited (SH:600847; HK:1065); Fujian Longking Co. (SH:600388); and Pan Asia Environmental Protection (HK:556).
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