Chinese urban water supply and the role of foreign companies, by Delphine Spicq, associate professor at the College de France,

Water-carrier with a wheelbarrow in Beijing. Before modern water conveyence systems, people got their supplies from carriers who brought water from rivers and wells.

The Environment often makes the headlines these days in China, especially in the case of problems related to water shortages or pollution. Indeed, water is an important issue in the Middle Kingdom since it is badly needed for economic development but also because China’s hydrological situation is rather paradoxical. General data are favourable, but precipitation is unevenly spread across the nation: It is very limited in the North-East provinces (Qinghai and Xinjiang provinces, where it comprises between 25 and 50 mm per year), it is rather limited in the North up to the Yangzi river and very abundant in the South, especially in the South-East (2,000 mm per year). Moreover, precipitation is concentrated within a couple of months and vary a lot from one year to another. When linked to population, these resources can be considered as meagre and put China at the hydric stress limit (1700 m³/year/inhabitant) since it sometimes falls as low as 1800 m³/year/inhabit.

To cope with this situation, water resources must be secured to insure a regular supply to the main cities. The first modern water supply systems which replaced the traditional method — in which water taken from various waterways was filtered, boiled and then stored for future use — were put in place by Westerners at the end of the 19^th century. The foreign settlements of treaty ports where foreigners benefit from permanent residence and freedom of commerce were the first to install this kind of modern supply in China. It was in Shanghai, in the main European settlement, that the first waterworks were created in 1883 to supply the international settlement. A few years later, other urban centres, such as the English settlement (1897) and Chinese city (1900) of Tianjin, the other foreign concessions of this city, and the Chinese areas of Shanghai (1905) established their own waterworks. From 1905 to 1915 most of the treaty ports set up modern water-supply systems as well: Canton (Guangzhou) and Chengdu in 1906, Beijing and Hankou in 1908 and 1909 respectively. Eventually, other major Chinese cities installed such systems between 1915 and 1930 (Kunming did so in 1915, Suzhou a few years later, etc.). Thus, by the beginning of the 1930s, most large Chinese cities were well equipped with waterworks, while towns and villages still used traditional supply and only had access to limited quantities of water of questionable quality in doing so.

Water-carrier drawing water from a well.

The systems installed used the standards of the day and were equal to those then in operation in the West (clarification with sand filter — slow filtration — chlorination and storage in a water tank or reservoir). They had been created and were operated by Westerners who mastered the technology and imported from their native countries all the material not available in China at the time. Foreigners also financed the projects, the Chinese investment capacity was insufficient. The projects were entirely conceived and carried out by Westerners through private companies which were granted the concessions for the supply of water to city residents. There are very few exception, notably the Beijing waterworks, financed, created and operated by Chinese exclusively but still dependant on imported Western technology and materials.

In a second phase, from 1950 on, after the founding of the People’s Republic of China and during the whole following decade, modern water supply was extended to all medium- and small-size cities under the supervision of civil and hydraulic engineers educated in the West such as Liu Fuzhi 劉扶祺 (1904-1955). Liu was born in a small village near Xi’an, the capital of the Shaanxi province, in north-western China. He received a Master’s degree in civil engineering from the Cornell University and then worked for a couple of years for the water filtration specialist, professor and engineer Allan Hazen before completing further training in the Karlsruhe University where he studies water supply and hydraulics works with the well-known professor Theodor Rehbock (1864-1950). Back in China, he was hired by the Tianjin ji’an zilaishui gongsi 天津济安自来水公司, Tianjin’s main waterworks company as second engineer, though he soon became engineer-in-chief. After 1949, he was in charge of the rehabilitation and modernisation the city’s water supply — which had badly deteriorated in the Second World War and the Civil War that followed — a task he achieved with great success. His expertise and working capacity were legendary, and he was solicited all across the country to conceive and install water-supply systems. The waterworks he created at the time were true technological achievements, since, at the time, China was closed off from the world and foreign materials or technology could not be imported. Thus all the different equipment had to be designed and produced in China under frequently difficult circumstances, since raw materials and skilled workers were hard to find. But Liu’s technical knowledge and inventiveness managed to meet the challenges. In addition, he trained a whole generation of hydraulic engineers and technicians, who quickly replaced him, since the unfortunate man died early from cancer in the 1950s. These men were in charge of the water-supply systems during the whole Maoist period and the first part of the Reform era up to 1995. They managed, year in, year out, with poor financial and technical means, to maintain a correct water quality and increase regularly the supply to match consumption and continued growth. This development became steady after 1978 and the beginning of the Reform period and then accelerates from the mid-1990s. Consequently, the existing systems had to be extended and modernised once again in the 1980s.

Water-carriers filling their buckets at a well.

Then, from the mid-1990s on, these old and dilapidated supply systems again required replacement, extension and modernisation to meet the soaring demand. A second round of modernisation thus began, but this time foreign companies were called upon for both financial and technical assistance. Thus, leading international companies in the water market, such as Véolia (the former Compagnie Générale des Eaux, later Vivendi, operating in water supply and treatment as well as waste disposal), Suez (the former Lyonnaise des Eaux, also specialised in water treatment and waste disposal), Degrémont, a subsidiary of Suez Group and specialised in water production plants, Saur (formerly belonging to Bouygues) et Thames Water, the first British water-treatment company, bought and operated 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 the major Chinese cities such as Changzhou, Chengdu, Hohhot, Kunming, Lanzhou, Tianjin, Shenzhen, Yangzhou, etc.

This new intrusion of foreigners into public utilities may surprise at first glance but can be easily understood. The Chinese central state and the local governments don’t have enough financial capacity or know-how to proceed with the required investment to modernise and develop the water-supply plants and networks. The reasons are manifold, among them the low price paid by costumers for water.

China which still faces a technological backwardness in water treatment and production has had to resort to foreign groups leading the field. These international companies can provide the best and most up-to-date equipment and the latest innovations for a competitive price. However, this reappearance of Foreigners on the water supply scene and the management of public utilities is brought into question, since it had been at the beginning of the 20^th Century when Westerners owned and managed the water companies in China. Indeed, many Chinese feel bitter about the delegation of a public service to foreign-owned companies. Partly because it means that the population’s welfare depends on private corporations, whose first goal is the maximisation of 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 progressive intrusion of foreigners into the Chinese economy. But one has to keep in mind that foreign corporations’ activities in China are regulated by law, and the Chinese central government also retains a voice about the choices made and decisions taken concerning this important resource. In addition, Chinese economy’s modernisation cannot but resort to foreign companies, a fact that doesn’t seem to constitute a problem in itself. The issue is rather the role the central government is going to play in the process: Is it going to succeed in just framing and lightly controlling the activities of international businesses without discouraging them from investing in China and without resort to an all-market policy to the disadvantage of the population.

Let’s take an example to illustrate this assertion: the price of water supplied to citizens. The appeal to foreign capital has a counterpart: investments have to look profitable enough in the long run so that international groups find it worthwhile to invest. An attractive return on investment means a important increase of the price of the water — Chinese citizens pay on the average only 1.4 yuan (i.e., 14 euro-cents) for a cubic meter, whereas the average price in Europe for the same amount is 1.5 euros (German prices are the highest at 1.91 euros and French prices the lowest at 1.27 euros) — which could fuel discontent and riots in big cities. Water prices have been recently raised and resentment is high among the population, who let it be known, mainly through the newspapers. This opposition has not been repressed by the authorities for the moment, but the question is whether the latter will be able to contain it in a peaceful way or whether — another scenario — in stepping backwards they will impose on foreign companies a longer price adjustment and thus a lower profitability on the investment on Chinese soil with the risk of breaking signed contracts.

A public well in Beijing. Most were private
but there were also some public wells.

Bibliography

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