The Chinese government will resist pressure from overseas investors in China's water industry for rapid rises in domestic water rates, saying poorer households need time to adjust, according to a senior policy official.

Qin Hong, deputy director of the Ministry of Construction policy research center, said the government would have to subsidize low-income families to cover the cost of water utilities, if prices rose.

Qin said the average charge for each ton of water consumed in major cities was 1.34 yuan (17 US cents), more than ten times the rate in 1988.

The country began building water treatment facilities nationwide in the 1990s to protect the water resources from pollution, this increased the cost of the potable water supply as well.

More than 60 percent of urban households spent three to four percent of their monthly disposable income on water charges, already nearing the upper limit of their affordability. The income of these households was below the national average of 975 yuan (US$81) per month in 2006, Qin told the 2007 China Water Congress in Beijing.

On the other hand, domestic and foreign industrial representatives attending the congress expressed great concern over the profit potential of their investments in the water industry, saying the undervalued price would eat into their investment returns.

The government was caught in between being pressured to raise prices to guarantee proper returns and the pressure from providing affordable water to low-income families, she said.

However China's water industry, despite its slim profit margins, was still a promising sector, said Zhao Wei, deputy chief engineer with Singapore-based Hyflux Newspring Construction Engeneering Co., Ltd., which operates waste water treatment plants and desalination projects in Jiangsu, Hebei, Liaoning and Shandong provinces.

The government was working on industrial policies to support the cross-regional development of more efficient, large-scale water treatment facilities, and to avoid construction of small enterprises with higher operating costs, said Qin.

(Xinhua News Agency April 20, 2007)