China denied it for years. And it wasn't until April of last
year that the communist nation finally came clean.
Finally, in the spring of 2010 -- only after satellite images had
been released of construction taking place -- China officially told
its Indian neighbor that it was building a major dam on the Yarlung
Chinese officials were quick to say they wouldn't be diverting any
water. Supposedly, the dam is only purposed to create electricity.
I think that's a farce.
Make no doubt about it. The most criticalcommodity for
China'seconomy isn't oil, steel or even wheat. It's water.
Few Americans realize what a luxury it is to turn on the faucet for
a glass of clean water. More than one billion people each day don't
get enough water to drink or bathe in. Less than 3% of the world's
water is fresh and there's no more of it now than there was a
million years ago. What's worse, more than 6 billion thirsty people
must now share it.
Former United Nations Secretary-General Boutros Boutros-Ghali
predicted the wars of the 21st century would be fought over water.
I'm glad that so far, it hasn't happened, but that may be changing.
The Tsangpo Dam that China recently admitted to building is one of
five such projects Beijing is working on, ostensibly to meet its
electricity needs. However, any one of these hydroelectric power
projects will affect lives -- and create tension -- for millions of
China has roughly 20% of the world's population, a huge chunk of
its industry and only 7% of its fresh water supply. It needs as
much water as it can get. It's predicted that China will see a
water shortage of up to 201 billion cubic meters in the next 20
years. China's shortfall works out to 53.1 trillion gallons -- or
roughly five times the amount of water the entire U.S. population
uses in a year.
Not only is there simply not enough water, but the potable water
the country has is unevenly distributed in a vicious
drought-monsoon cycle. Existing shortages already cost China 2.3%
of its gross domestic product each year.
China can remake its power system with new transmission lines, wind
farms and solar panels. It can and has built highly efficient
factories. The country can free itself from the shackles of
communism, release political prisoners and embrace democracy. But
without serious, proactive, nationwide efforts to conserve water,
the country and its economic engine will, quite simply, stop
We all know that no nation will sit idly by and fall victim to such
an obvious and dangerous trend. That means if there are companies
engaged in alleviating China's water shortage, they're sitting on a
goldmine. Alsobear in mind, the strategic water issues in China
will also play out in India, so companies that cut their teeth
resolving China's long-term challenges will have a foot in the door
working with India as well.
And that says nothing of the developed world and its need for
water. My favorite game-changing stocks in this sector are primed
to grow from the global scarcity of water, not just the Chinese
Action to Take -->
Companies such as
offer bright potential. The company is based in Beijing and helps
manage water supplies. It has a hand in everything from sewage
treatment to tracking reservoir levels, but it is still a tiny
company ($90 million market cap), leaving plenty of room for
If you want toprofit from China's need for water, starting your
research with a Chinese-based water company is a no-brainer.
P.S. -- Tri-Tech is a good place to start your research, but I
haven't yet checked the company stem to stern. For my Game-Changing
Stocks readers, I covered one of my favorite plays that has been
tackling the Chinese water shortages since 1994. It's little wonder
why from 2002 through 2009 the stock returned 826%. You can see all
the details in my latest report, "The Hottest Investment
Opportunities for 2011."
Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.