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he government should completely lift barriers keeping overseas investors from China's urban infrastructure market, a senior construction official said yesterday.

Zhang Yue, deputy director of the urban construction department at the Ministry of Construction, said technology and experience from investors in developed countries would help Chinese cities function better.

"I personally suggest that all urban infrastructure projects in China should be open to overseas investors," Zhang told China Daily.

The government used to have a monopoly on cities' water, electricity, gas and heating supplies.

Over the last 10 years, overseas and private investors have gradually been allowed to enter the sector. Last year, the government moved to encourage overseas investors to enter urban road construction, water, gas and heating supply and waste treatment markets in cities nationwide.

"But barriers still exist when they come to the business," said Zhang after yesterday's press conference organized by the State Council Information Office.

For example, overseas and private investors cannot become leading shareholders in companies that build or manage underground infrastructure networks, such as water and heating pipelines.

But Zhang said in some cities overseas and private investors have already started shareholding enterprises and become major shareholders in urban infrastructure businesses.

Qiu Baoxing, vice-minister of construction, said China's urban facilities offer tremendous market potential. The sector will boom as urbanization continues to accelerate, he added. About 40 per cent of China's population live in urban areas, nearly 10 percentage points higher than in 1998. The country's urban population is expected to grow by around 1 per cent every year for the next 20 years.

Mammoth investment

According to Qiu, investment opportunities are many. The urban water supply system alone needs 2 trillion yuan (US$250 billion) of investment, he said.

China's water treatment system needs 500 billion yuan (US$10.4 billion) to construct factories and upgrade facilities, Qiu said. At the moment, nearly half of all wastewater is allowed to flow back into rivers without being treated. Around half of 661 cities on the Chinese mainland have no wastewater treatment systems.

Qiu's ministry, which is responsible for planning China's urbanization, has been involved in the opening up of the country's urban infrastructure sector since 2003. He said some multinationals have already been involved in waste treatment and other urban infrastructure projects usually operated by State-owned enterprises.