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Global Economic Crisis

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Regional economies are fundamentally sound, but export ... Changchun. Haikou. Hainan. Zhuhai. Guangdong. Pingdi. Kaiping. Shenzhen. Nanao. Guangdong. Jiujiang ... – PowerPoint PPT presentation

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Title: Global Economic Crisis


1
Global Economic Crisis Impact on Water Industry
in Asia China
PECC Annual Meeting Washington May 13, 2009
2
World Economies
Overview of World Economies
Sources The Times IMF
3
World Economies
Overview of World Economies
Sources The Times IMF
4
Asia Better Off than Most?
  • Regional economies are fundamentally sound, but
    export dependence is a big vulnerability
  • Capital inflows are diminishing, hurting
    investment prospects and real sector
  • Can domestic demand compensate for the worsening
    external environment?
  • South Korea is particularly vulnerable
  • China has suffered (the collapse in the stock
    market, shrink of auto and residential sales),
    but may be able to weather the crisis better than
    most

5
Real GDP Growth in Asia/Pacific Economies
Percent change
Source the Economist
6
Chinas Economy- Slow Down
  • Growth slow down - 13. in 2007 to 9.0 in 2008
  • Exports fell in the last 2 months of 2008
  • Production of electricity fell in the second half
    of 2008
  • Purchasing Managers Index (PMI) fell in the
    second half of 2008
  • Weakness of auto sales
  • Fall of residential home sales
  • Job losses factory closures

7
Chinas Economy - Stimulus Plan
8
Chinas Economy - Stimulus Plan
  • 10 Points Plan
  • HousingMore affordable and low-rent housing
  • Rural infrastructureImprovement of roads and
    power grids in the countryside, and water supply
    projects
  • TransportMore rail links and routes for
    transporting coal. New airports in the west.
  • Health and educationMore hospitals in smaller
    towns and cities. More schools in the western and
    central regions, and for children with special
    needs countrywide.
  • EnvironmentFocus on sewage and waste treatment
    facilities and preventing water pollution.
    Accelerated green belt and natural
    forestplanting programs. More energy-conservation
    initiatives and pollution-control projects.

9
Chinas Economy - Stimulus Plan
  • 10 Points Plan
  • IndustryFurther subsidies for high-tech and
    service industries.
  • Earthquake reconstructionMore funding to rebuild
    areas damaged by the Sichuan earthquake.
  • Wealth creationIncreased grain purchases and
    farm subsidies to raise rural incomes. A boost in
    pension funds for a wide range of workers. More
    allowances for low-income city dwellers.
  • TaxReforms to value-added tax, effective 1
    January 2009. Reduction in corporate tax burden
    of CNY120 billion (18 billion).
  • FinanceRemoval of loan quotas and ceilings for
    lenders. Increased bank credit for rural areas,
    small businesses, and companies involved in
    technology, iron, and cement.

10
Water Sector in China
  • Chinas economic stimulus package
  • Ecological environment (9)
  • RMB350 billion (51 billion) goes to ecological
    environment
  • Water, wastewater waste treatment
  • Rural infrastructure Construction Program in 11th
    Five-year Plan (9)
  • RMB370 billion (54 billion) big slice goes to
    water
  • Safe drinking program and wastewater treatment in
    rural areas
  • Sichuan Earthquake disaster fund (25)
  • RMB1 trillion (147 billion)
  • Water, wastewater, methane gas digesters, roads,
    electricity

11
Water Sector in China
  • 2009 Environment Investment Plan in Major Cities
  • Beijing RMB 30.5 billion investment on
    environment
  • Shanghai RMB 86 billion for 20092011
    Environment Action Plan
  • Chongqing RMB 8.5 billion for 2009 water
    resources projects
  • Guangzhou RMB 48.6 billion to clean 121 rivers

12
Water Sector in China
  • 2007-2008 Accumulative Fixed Asset Investment
    Increase

Source China Economy Net
13
Veolia Water in China
HEILONGJIANG
Harbin
JILIN
Changchun
LIAONING
XINJIANG
HEBEI
China
INNER MONGOLIA
Shijiazhuang
SHANXI
Xining
SHANDONG
QINGHAI
GANSU
Xian
HENAN
XIZANG
SHAANXI
JIANGSU
ANHUI
Lhasa
SICHUAN
ZHEJIANG
HUNAN
Fuzhou
JIANGXI
GUIZHOU
FUJIAN
YUNNAN
GUANGDONG
GUANGXI
Legend
Nanning
Veolia Water
Shenzhen Water Group
14
Water Sector in China Case Study
15
Water Sector in China Case Study
  • Shanghai Pudong Project
  • 50-year contract to 2.65 inhabitants for the
    operation and maintenance of full water services
    in the key business district of Pudong, Shanghai,
    including water production, distribution and
    customer services.
  • First significant public-private partnership for
    full water services in China

16
Water Sector in China Case Study
Shanghai Pudong Veolia Water
Total water consumption see 7 increase in 2008
despite economic downturn globally. Residential
consumption remain strong increase in Q4 2008 and
Q1 2009, but industrial volume declined in Q4
2008 and Q1 2009 by 6 and 4.2, exhibiting the
impact from the economic change. Total water
sales shrink by nearly 6 in Q1 2009, reflecting
the impact of global economic crisis taking
effect on the industries in the city.
17
Water Sector in China Case Study
  • Tianjin Shibei project
  • 30-year Contract to supply 3 million inhabitants
    with drinking water in Tianjin. The project will
    cover the district of Shibei, the Northern part
    of Tianjin, and the Binhai district on the
    Eastern coast.

18
Water Sector in China Case Study
  • Non-industrial consumption sees increases in
    the Q4 2008 and Q1 2009 at 9.45 and 7.82
    respectively.
  • Industrial volume still sees increases by
    12.25 8.69 - higher than the other city
    average, reflecting the fast industrial
    development in this city.

19
Water Sector in China Case Study
  • Shenzhen Project
  • 50-year contract to supply 3 million
    inhabitants for the production and distribution
    of water, customer relations and the collection
    and treatment of wastewater in the Shenzhen
    Special Economic Zone

20
Water Sector in China Case Study
  • Residential consumption sees 4.19 and 3.28
    increases in Q4 2008 and Q1 2009.
  • Industrial volume decreases by 12.54 and 19.57
    in the same periods, reflecting heavy impacts
    on industries due to global financial crisis.

21
Water Sector in China Case Study
  • Changzhou Project
  • 30-year contract to supply 1.65 million
    inhabitants for full water services in Changzhou
    (production, distribution of water and customer
    services)

22
Water Sector in China Case Study
  • Domestic water consumption increase shrinks from
    15.7 in Q4 2008 to 4.0 in Q1 2009.
  • Industrial water sales see dramatic decreases in
    Q4 2008 and Q1 2009 by 7.7 and 9.7.

23
Water Sector in China Conclusion
  • Water industry in China is fundamentally sound,
    especially with tariff increase potential in 2009
    in major cities.
  • No increase of unpaid bills for water
    wastewater
  • The impact on key cities is limited.
  • The stimulus plans will see effects by the end of
    2009.
  • The effect of stimulus plan on water industry is
    not obvious yet.

24
Thank You
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