China to raise water rates
Reports this week that Chinese cities will soon raise water rates will be welcomed by those who have been campaigning to preserve the precious little the country has.
Campaigners and some journalists have argued that higher rates should reflect the scarcity of water in China. It was also good news for Chinese water companies. Beijing Capital Co. (SH:600008), Jiangxi Hongcheng Waterworks Co. (SH:600461), Wuhan Sanzhen Industrial Holdings (SH:600168) and Nanhai Development Co. (SH: 600323) 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's population is constantly rising, as has the country's level of 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 has already started a huge engineering project to ship water from the Yangtze river in the south up to the Yellow River area, Beijing and the northern farmlands. The ambitious project (pictured, near Beijing) 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 and, at of the end of June 2009, RMB58.97bn had already been spent.
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, 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 in the near future. 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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