Preliminary Study on the System of Water Industrial Economic Policies in China

Shi Ying Cui Fuyi
(Harbin University of Civil Engineering and Architecture)

Abstract: The new water industry is facing challenges under market economy. This paper analyzes the situation and problem of water industrial economic policies, it suggests the system of water industrial economic policies in China, mainly including price, tax, investment and credit, market-based incentives and economy accounting etc.
Keyword: water industry; economic policies; China

Water industry is a new industry that transform from the traditional water supply and drainage engineering for social sustainable development under Chinese characteristics market economy. It is an important part that water industrial economic policies belongs to all the water industrial policies. At present, Chinese characteristics market economy was being work up and improved, the based function of market system was being strengthened. How to found Chinese water industrial economic policies system quickly under market economy, accelerate the development of water industry, try to catch up with the world advanced management level.

1. Existing water industry policy analysis in China

1.1 Based-state of existing water industry policy in China

In China, traditional water industry management policy have been carried out basing on the controlling and direct administrative intervention, its economic policy was just the auxiliary means of laws and systems (especially sewage standard). Now available, water industry economic policy didn‘t found an independent and improvement system. It mainly included of drainage fee system, synthetic utilizing water resource, water resource protection fee system, the fee systems of civil water and industrial water etc.

1.2 Existing problems of water industrial economic policy

Though existing drainage fee system and synthetic utilizing water resource acted on Chinese water resource protection, but these systems still existed many problems under planning economic system controlling.

① Injunctive water price. As water price didn‘t make according to commodity value law, it resulted water price was so low, water company couldn‘t enlarge reproduction or important technology changed without enough money. At the same time, the situation of loss water in city was worse and worse, water company was just dealt in with little profit.

②Along with market economy working up step by step, it‘s a question how existing water industry economic policies could be suitable for market mechanism, for example, using value of drainage fee and accommodation exemption wasn‘t in conformity to the principle of "polluter must pay for". Because the level of use of water was relatively low in China, the economic benefit of unit flux was long distance to developed countries, so policy of water industrial economy can‘t truly embody law of value （drainage fee is the lowest of all the operate cost of sewage plant ），simultaneously , also induct water resource distributed system which market competition conjoined government macroscopic harmonize control.

③ Existing water industrial economic policies run low systematic ， not yet come into thoughts enough to carry out sustainable development water industrial economic policies. Under the policies of water industrial lay down, internal consideration of water industry management department is often given, be less changed from governmental and macroscopic harmonize control angle into more economic means.

④ Existent economic policy itself need to be reformed, especial drainage fee system. Now available drainage fee system was a penalty system. It exists many problems that need to be settled, such as the standard making, drainage fee expropriation, purse manage and use.

2. Study on water industrial economic system under the condition of market economy

The writer put forward that water industrial economic system should be founded quickly, the present goal of reform is to establish market economy mechanism. It simply included that price, tax, investment credit, microcosmic incentives and synthesis water industrial economic counting system etc.

2.1 Water industrial price system

Water industrial is a business together with produce, supply, sale, and reuse. Water is a dualism goods. So the price of water was made according to market economic principal, include goods‘ dualism. Thus water price consist of the fee what water companies and sewage plants needed during construction, depreciation of equipment, extensive reproduction, except for water resource fee.

As water price was very low in China, water resource should be put into the market during the price reform. According to price law and the relation between supply and need, water price would be adjusted. It made market price exactly embody the cost of water price. At last, a sustainable water resource price system should be founded.

Suggestion mainly include:

① Water price would be made according to all the cost. Some products would pay the tax and fee, which do harm to the sustainable development of water industry. Thus the price of products could really embody the cost of water industry during reproduce.

② Different water price would be carried out due to quality and area, encourage to economize using water.

③ The economic price would be used instead of injunctive water price, while country or corporation made investment planning.

④ Balancing the stead effect of water price regulated, try to avoid the bad effect on the citizen due to the raising price with some incentives, such as tax.

2.2 Water industry tax system

Improving water price, everyone that utilize water resource must pay for the tax according to the degree of being polluted and used. Now, it‘s the key time that tax system is being reformed in China. Water industry tax system should be founded suitable for China.

A few suggestions:

①The preferential policy or different tax would be carried out to help, induct the development of water industry. It could be changed basing on exist interest rate of tax.

②The preferential policy would be given to cleaner production or polluted water reuse, these kinds of corporation couldn‘t pay for all tax or part tax.

③ Along with the management of water resource area, diversified income-profit also should be reduced tax or allowed preferential tax.

2.3 Water industry investment or credit system

Water resource protection owned the characteristics of very strong social benefit. To keep on the development of water industry, water industry would be helped in financial budget, investment way, credit market. The government should make a long-term stable investment credit system fast enough to give corporation of water industry more money.

A few suggestions:
① National water industry fund or water industry corporation should be founded under the mature condition. National water industry fund should be specially founded in national bank (like development bank).

②The capital could be raised by national middle or long-bond what large water industry construction needed. The preferential policies would be carried out, like credit rate, depreciation, repay a debt of water industry investment project.

③The use of water investment that need to be paid for has been carried out, include government finance, drainage fee, resource amended fee etc. The capital could be raised by local water industry invest corporation, including middle-long term bond, stock, foreign capital.

④Investment benefit have been raised under market system, such as water industry would be into market sooner, the bidding of water industry project, water plant or sewage plant industrial management.

2.4 Water industry incentives policy on market

After water industry economic policies could be founded at macro-scopical or middle level, it must cooperate with micro-scopical water industry economic incentives, so it could really embody "polluter must pay for".

A few suggestions:

Drainage bargaining law: It would be tested in some place, and continuously summarized experience. Sooner drainage admission certification carried, tried to be spread out all over the country. This law could be cooperated with the existing system.

Water industry insurance law: Water industry insurance law should be founded under the mature condition. The problem is to be solved that make amends to blameless pollution, economic responsibility for polluted management.

2.5 Water industry and economic counting system

Water industry economy and water resource counting system could make certain actual water resource price. It could completely impersonality evaluate social economic development situation and developing potential in future, moreover, exactly assort long-term development with brief increasing, connect economic increase with water resource. Its meaning is so important.

Suggestions:
The counting theory and system of water industry and water resource would be founded.

The existing country economic counting system could be reformed. Water industry economic counting system should be tested in suitable department or area. The law of water counting and water pollution loss would be put into country economic counting system. A counting system would be founded that the reproduction between water industry and water resource was been an independent business.

3. Conclusion and suggestion

In being water industry economic policy has difficultly adapted market economic system. Now, with market economy establishing, government should get hold of the opportunity to found or implement the water industry economic policy that would adapt market economy. Furthermore, a majority of laws and systems about water had been founded in planning system or reforming period. Under the new situation, legislation and management system should be innovated so that the laws and measures would be brought up that could assure the water industry economic policy carrying out. As the economic development, the market growth and the management exist large difference in lots of areas in China, government should allow that the economic policy doing good to water industry was established by local government according to their own situation, and experience would be summarized and carried out continuously. It should be the urgent affairs that price system, water industrial tax system, investment credit benefit policy could be founeded as soon as possible. At the same time, these policies should be evaluated in advance in order to regulate policies and measures or perfect implement condition. In this way, Chinese water industry could content the requirement of Chinese characteristic market economy, make economy continuously and steady develop in China.

Reference
[1] Xu Baojiu. Study on water industry in China. Water & Waste Water Engineering. 22(2),1996
[2] Wang Jinnan, Yang Jintian, et al. Study on Environment Economic Policy under Market System. China Environment Science. 15(3), 1995