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Zhang Yue, deputy head of the ministry's urban construction department, told Xinhua that China will further open its water sector to foreign and private capitals to raise the necessary funds.

In a document released last December, the Chinese government said by 2010, 70 percent of the waste water in Chinese cities mustbe treated before being discharged into the environment.

Zhang said the Ministry of Construction has in collaboration with the National Development and Reform Commission and the State Environmental Protection Administration drafted a plan for urban sewage treatment and recycling between 2006 and 2010. The plan is expected to be approved by the State Council soon, he said.

According to the plan, major cities must have 80 percent of their sewage treated by 2010. For medium and small cities, the rate should be between 60 to 70 percent.

Sewage treatment facilities have grown in China over the past five years and the country's sewage processing capacity has tripled since 2001. But only 60 percent of the capacity is currently used, due to a substandard sewage collecting network. Zhang said the expansion of the sewage collecting network will be a major task in the future.

Government will step up efforts to make sewage treatment and recycling more profitable and sustainable, Zhang said, adding thatthe policy of charging polluters for sewage treatment will be adopted in more cities.

It is believed that such a policy will make sewage treatment more attractive to non-government investors.

China began the reform of its urban water service system in 2000, focusing on the breakup of the state monopoly. So far about 200 cities have taken solid measures to achieve the goal, according to Zhang.

Xu Zongwei, another official with the construction ministry, has said that the urban utility service is actually among the mostprofitable industries.

Veolia, a French giant in the water industry, has already invested in 18 water projects in 16 Chinese cities, including a waste water treatment plant in Beijing, said Huang Xiaojun, Veolia's vice-president for China operations.