The poor water quality in rivers is mainly due to the low sewage treatment rate ("STR"), which stands at 42% for the whole country and is as low as 20% in most third-tier cities.
Investments in Chinese water utilities.
It is noted that Southern China, which is still seeing an economic boom, has a very low STR. Due to relatively richer water resources in the south, sewage treatment fees ("STF") have traditionally been lower than those for the north, which has led to insufficient investments in sewage treatment projects in Southern China.

According to the central government’s strategic planning for China's Eleventh Five Year Plan, the country's average STR should be higher than 60% by 2010. Facilities will be constructed in northern China to improve further the water-recycling rate, which currently stands at only 6% for the whole country. This represents an enormous opportunity for investors to profit from the construction of such facilities.

China is planning to divert billions of gallons of water hundreds of kilometres from drought-stricken regions to feed development in the capital Beijing.

Workers are struggling to finish the first phase of a huge canal to meet a surge in demand for water, fuelled by construction projects and industrial growth.

The project is already under attack as an expensive, makeshift attempt to counter China's environmental crisis with another environmentally damaging mega project. But the decision to speed up part of it also highlights how ordinary people are paying the price for Beijing's show-piece new buildings, along with associated lakes, fountains and gardens.

They include farmers already suffering from shrinking reservoirs that can no longer feed their irrigation systems.

Some have abandoned traditional crops such as rice, others have given up land to the desert that is encroaching on swathes of the country, and others are switching to livestock, a problem that is making the arid conditions worse.

"I had to give up watering my land." said Dong Zhiwen, 34, a goat-herder near the edge of a deep section of canal being dug through Hebei province to Beijings's south.

"All my land was irrigated before, and I could grow wheat," he said. "From the beginning of this year there was no water supply."

The shortage of water across northern China is one of the most visible consequences of the country's inefficient use of resources, climate change and the pressure applied by its growing population and booming economy.

Government figures show Beijing has water reserves of 66,000 gallons per head of population - an eighth of the Chinese average, and a thirtieth of the world average.

China Water Transfer Project

The south - north water diversion project is the $60 billion solution. Three enormous canal systems are planned (two already under construction) to take water from the Yangtse in central China to the Yellow river and Beijing in the north.

"We will have to cut down water irrigation to the fields," said Miao Shunyao, an official with the Xidawang water authority. "Those in the north of the province are already having to give up rice paddies to grow corn to cut down water. Here it's wheat and corn already."

The Xidawang Reservoir is already at it's lowest ever point, after constant use for irrigation and to supply the city of Baoding.

Most residents insist that the sacrifice is one they are prepared to make for the Olympics. "The Olympics are a very big event for the whole country," Miao said.