China's future urbanization requires a market-orientated approach, said Qiu.

Both domestic and overseas investors can now compete to win contracts in urban road construction, water supply, gas and heating systems and waste treatment. These sectors are currently operated mainly by state-owned enterprises.

"With regard to non-profitable sectors, such as environmental protection and sanitation, we are going to organize a bidding process to attract better-suited operators," said Qiu.

Qiu's ministry, which is responsible for planning China's urbanization, and city and town construction and management, has been involved in the opening up of urban infrastructure since last year.

Li Dongxu, director of the Ministry's Urban Construction Department, told China Daily yesterday that various reform measures are urgently needed in China's urban infrastructure construction and management.

"Many practices, based on the old planned economy, are becoming barriers to cities' further development," said Li.

Most of the water supply, public transportation, sanitation and other infrastructure are exclusively operated by the state-owned enterprises, Li said.

"These enterprises are inefficient and some local governments cannot invest enough to keep up with the fast urbanization process," said Li. "Problems often occur when cities spread into former rural areas."

Li said his ministry has cooperated with domestic and foreign financial organizations to invest in China's urbanization.

The ministry and the Agricultural Bank of China recently entered into a 30 billion yuan (US$3.6 billion) agreement to speed up the development of infrastructure in urban areas.

The loans will be provided to competitive investors to fund infrastructure projects such as water supply, drainage systems, used water and waste treatment and efficient energy use.

China has undergone a rapid urbanization in recent years, hitting 37.7 percent of the population by the end of 2001, 7 percentage points higher than in 1998. China has 662 cities and 20,358 towns, with a total urban population of 481 million.

China's urbanization has also gained much investment and attention from international financial organizations such as the World Bank and the Asian Development Bank.

(China Daily February 13, 2003)