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China's Urban Wasteland

Stocks in this article: MSFT TOTDY JSGRY GM F SI RHHBY BAYRY

"The vision and principle of eco-civilization should be fully integrated into the whole process of urbanization, and we should take a new urbanization path which is intensive, smart, green and low-carbon," the UNDP quotes Chinese Academy of Social Sciences President Wang Weiguang saying at an event to announce its report.

I'm not sure quite where this statement leads, but smart and green should be keywords. Establishing a post-2013 toilet for a nation where poorer people still depend largely on outhouses and busted flushing devices wouldn't be dumb. If the porcelain god can save water in a largely arid nation, then it would fit the 2013 definition of green.

WCs make sense as a starting point because Chinese officials have worked on modernizing them since 2005 when Shanghai hosted the World Toilet Expo. Moving to ease stench and sometimes embarrassingly obvious sanitation problems as high-end foreign visitors throng inward along with migrants, city governments such as Shanghai and Beijing have overhauled public restrooms. Anti-bacterial tiles, water-saving urinals and diaper-changing tables were among the priorities of 2005, the official newspaper China Daily said that year.

Those efforts inevitably helped the business of American Standard, a brand owned now by Lixil Group (JSGRY), and its Japanese rival Toto Ltd. (TOTDY).

But toilets just cap a huge tangled maze of pipes that China must rework to accommodate more people in the cities. No matter how civilized the eco-civilization gets, investors might expect growth in sales of well-established automotive multinational corporations, such as General Motors (GM) and Ford (F), as people commute from farther-flung suburbs. They should see stable returns from energy-efficient building suppliers including Siemens (SI) as cities try to minimize environmental impacts while permitting new building construction.

As in cities anywhere, time-pressed Chinese urbanites will prize convenience. That means more business for foreign fast food chains such as Pizza Hut, part of YUM! Brands (YUM), to name one favorite among younger city dwellers. Car exhaust, fast food overkill and other downtown health hazards make a perfect Rx for an expanding health care industry that is forecast to rise from $357 billion in 2011 to $1 trillion in 2020 (largely because of aging). Medicine in China draws increasingly from foreign players such as Bayer (BAYRY) and Roche (RHHBY).

Whatever China does, the UNDP suggests that it not hit the fan.

"Because of the magnitude and speed of the changes underway in China, the window of opportunity for addressing many of the associated challenges is relatively small," the UNDP report says.

At the time of publication the author had no position in any of the stocks mentioned.

Ralph Jennings is on LinkedIn.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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