China's Water Market - Opportunities for Foreign Investors

Abstract

China has undergone a remarkable transformation process and rapid economic development. However, the resources that such growth demands have raised deep concerns about the long-term sustainability and hidden costs of China’s development. Many of these concerns are associated with the state of China’s water resources. As demand for water has increased, so too have problems with water shortages, pollution, falling groundwater tables, and flood/drought damages. To tackle these challenges, the Chinese government increasingly encourages foreign companies to engage in the country’s water market. Market research studies claim that this market holds promising business opportunities for both domestic and foreign companies. This article analyses this statement from a foreign investor’s perspective. It evaluates key factors influencing the reform policy of the Chinese government and introduces the main policy and investment implications. It shows that in spite of the remaining market barriers, the Chinese water market indeed holds business opportunities. In fact, a key role in solving China’s water crisis should be played by international companies and governments.