Foreign Investment Opportunities in China's Water Distribution Sector

Freshfields Bruckhaus Deringer

April's new Foreign Investment Industrial Guidance Catalogue (外商投资产业指导目录) (the Investment Catalogue) has reclassified many sectors of the economy and created new opportunities for foreign investment. The Investment Catalogue puts foreign investment projects under three categories, "encouraged", "restricted" and "prohibited". Importantly, it has removed the previous ban on foreign investment in urban water distribution networks.

The ban was lifted to address the rapidly growing demand for water in China's urban areas. According to the National Bureau of Statistics, nearly 400 of China's cities are facing acute water shortages. While these shortages are partly due to weather patterns, they also are the result of the sub-standard level of the country's aged water distribution networks.