In 1989

the United Kingdom implemented the world's first comprehensive privatization reform of the water sector. After more than 3 decades of operation

both the institutional performance and deep-seated contradictions of this model have gradually emerged. Taking Thames Water Utilities Limited

the largest private water utility in the UK

as a case study

this paper systematically analyzes the challenges confronting the UK water privatization system and explores the application value of project financing models. The findings reveal that the privatization model exhibits structural issues in the realm of basic water services

including the erosion of public welfare attributes

the accumulation of debt risks

and insufficient fulfillment of environmental responsibilities. In contrast

the innovative application of the Regulated Asset Base( RAB)model in the Thames Tideway Tunnel project has effectively attracted long-term capital and achieved risk isolation. Based on dialectical analysis

this paper proposes that China's water sector reform should be grounded in its national conditions

avoid mechanically transplanting foreign institutional systems

and selectively draw on applicable technical experiences. The paper advocates for coordinating the public welfare attributes of water infrastructure with the functioning of market mechanisms

and for constructing a Chinese-characteristic water governance system that integrates government and market coordination

thereby providing theoretical support and practical references for advancing the high-quality development of urbanrural water services.