China is a country in short of water. With the rapid economic development and population expansion, the water problem has become a hinder in social development. Enhancement of the water supply capability and improvement of waste disposal efficiency have become a urgent issues at present. Now 400 out of 669 cities is suffering water shortage and 110 of them are seriously lacking in water. According to the forecast, around the year 2030, the population in china will amount to 1.6 billion, and there will be a peak of water demanding, till that time, water resource per capita will approximate the international standard of water shortage.

As water is not a real commodity in real sense. The deviation of water value and price seriously restricts the development of water industry. Therefore, water resources are not under effective protection. The water industry is monopolistically invested and run by local government. The water industry is called ¡°the last barrier¡¯ in the marketization of public utility.

In 2002, the fort began to be broken down. The government has issued many policies to marketize water industry. Especially after the issue of ¡° On Expedite the Pace of Marketization in Urban Public Utility¡± by four committees including Development and Reformation Committee, the marketization pace in water industry has quickened. The water industry has become a competing stage for foreign capital, the state capital and private capital, chasing monopoly and economic effect. Anyone who dominates the water resources, will obtain the large scope of future development and get a chance to get great benefits in the process of development in water industry.