China's wellspring of demand

Increasing water demand driven by the country's rapid urbanization, growing middle class and higher sanitation requirements greatly adds to the pressure on supplies.

For Chaussade, the most notable factor in his company's China business is that water demand at a plant in Chongqing surged 25 percent in a year.

"That is something that has never happened in Europe."

He uses China's South-to-North Water Diversion Project, the largest of its kind in the world, to illustrate China's vastly increasing demand.

"It is not because the Chinese government likes big, big projects, but because the underground water in Beijing is going down, down, down."

"So especially in China, you need to combine the best water management, which means how can we provide the right amount of water to the population with minimum leakage and reasonable consumption? How can we reuse water as much as we can, to preserve water as much as we can?"

At Suez Environnement's new research and development center in Chongqing, 20 researchers are set to provide solutions to optimizing the operation of network systems, reducing leakage, and finding more durable materials, among other tasks to help China tackle its water crisis.

The Chinese government has recognized its water problem and moved it much higher on its agenda.In January 2012, the State Council issued its first work paper, calling it the "most strict water resources management system", and setting out specific objectives for water consumption, efficiency and water pollution.

At the same time, the Ministry of Water Resources also announced an ambitious plan to invest more than 140 billion yuan ($22.2 billion; 16.9 billion euros) on water conservancy projects this year, while the total investment on such projects between 2011 and 2015 is expected to be about 1.8 trillion yuan.

Chaussade says he has seen a clear shift of focus in China from purely economic development to sustainable development.

"Water is becoming the very core of sustainable development issues because it is a mix of population consumption, industrial requirements and agricultural needs."

China's rapidly expanding water sector, valued at $48 billion, is the third largest in the world, according to the research firm GWI Global Water, behind the United States at $110 billion and Japan at $59 billion. Analysts estimate that the industry value may triple to $150 billion over the next five years.

Suez Environnement is not the only company that has found water is the new gold in China, with State-owned enterprises, private and international companies all vying for a share.

Chaussade says there is increasing competition in the sector. "In 10 to 15 years there will be consolidation," he says. "I can see three to five Chinese companies emerging from that consolidation."

For its part, Suez Environnement has been expanding its business from the increasingly competitive conventional water supply and distribution to sewage and sludge treatment, and more high-tech industrial water treatment.

Charles Chaumin, Asia CEO of Suez Environnement, says water supply and distribution account for two-thirds of the company's water business in China.

"But we will see more wastewater treatment facilities, including sludge treatment both for municipalities and industrial parks," he predicts. "In five years our water and wastewater business will be 50-50 in China."

Chaussade says moving toward more technical water treatment is a natural process.

"Water is always an issue when a country is accelerating its development. They first need water as soon as the country starts development. Then they say they have pollution, so they need sewage treatment plants. When treating wastewater, comes the by-product sludge, so they have to treat sludge as well."

When Chaussade made his first trip to Australia in 2000, he says, all the authorities he met said Australia would never need seawater desalination projects.

"Now, there are big desalination projects in Melbourne, in Sydney and almost everywhere. We have no desalination project in China, but I'm pretty sure China will need that very soon."

mengjing@chinadaily.com.cn