Reflect on public utility reform

The tap water pollution incident in Lanzhou, Gansu province, should not only encourage the government to take their duties as supervisors seriously, but also shed light on the necessity of updating water supply lines and equipment in Chinese cities, says an article in 21st Century Business Herald. Excerpts:

The France-headquartered water services giant Veolia contracted the tap water business in Lanzhou from the city government in 2007, for a price several times higher than the other bidders.

Veolia’s high bidding price has finally been transplanted to the water users. Since 2007, the tap water price in Lanzhou has increased continuously, despite the citizens’ strong resistance.

To the disappointment of the customers and the government, the French enterprise did not rebuild the old water supply system in the city, which was built in 1955, and the residents have not enjoyed the services they expect from a world-class enterprise.

The tap water reform in Lanzhou seven years ago is a failure so far.

Many Chinese people think introducing foreign enterprises can necessarily promote the marketization of the Chinese economy. But, as the case in Lanzhou shows, without a well-supervised and regulated market environment, such market reform cannot benefit the people, and goes against the direction of a real market.

The Lanzhou tap water pollution case should make the decision-makers reflect on the path of reforms in the public service sector.