High Ambitions for China’s Desalinated Water Industry

31 October 2011

In a recent move aimed at addressing severe water demand issues - particularly in its parched northern region, China has set the ambitious goal of quadrupling production of desalinated water by 2020. Beijing appears poised to become a technological leader in the field as its market matures, following a familiar strategy toward green innovation that the country has been greatly successful with in the solar and wind sectors, according to the New York Times.

China's per capita water resources are a fraction of the global average. As the population continues to grow at least until 2025 and as agriculture and industry continue to expand, experts say China's water supply is destined to grow tighter and tighter.

But while investing in the desalination industry may help address water shortages, the technology is both energy-intensive and expensive. Currently, the cost of producing desalinated water is more than double the price it can be sold for, according to the New York Times. Nevertheless, several media reports suggest China is expanding its desalination plants countrywide.

In the short-term, this investment is targeted at capacity-building, increasing Chinese expertise in desalination and streamlining business credentials. In the long-run, China hopes to produce a viable, home-grown industry in a market that is sure to rapidly expand.

By 2020, China intends to have four times the capacity to produce desalinated water for home use and intends to export its product. In addition, the New York Times reports that China's second goal is to ensure that 90 percent of its desalination equipment is domestically produced by 2020.

Observers are drawing parallels between the desalination push and that seen in the solar and wind sectors, where a combination of domestic incentives, foreign investment, and state aid helped the country become a global leader.

China utilised its low-cost manufacturing advantage to create the world's largest production capacity in solar panels, where its share now stands at around 60 percent. China also surpassed the US in 2010 to become the largest producer of wind power in the world. However, both of these industries have been accused by foreign competitors of being unfairly buoyed by state support (see related story, this issue and Bridges Trade BioRes, 13 June 2011).

ICTSD Reporting; "China Takes a Loss to Get Ahead in the Business of Fresh Water," NEW YORK TIMES, 25 October 2011; "China mulls policies to boost seawater desalination," XINHUA, 24 June 2011; "Beijing takes lead in solar," STAR TRIBUNE, 20 October 2011; "U.S. falls behind China in wind power," REUTERS, 11 April 2011.

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