The development of adequate municipal freshwater supply and wastewater treatment systems will be costly, because China is far behind in the development of this infrastructure. Some 75% of all urban areas do not have adequate systems for the supply and distribution of potable water. Effective infrastructure for municipal wastewater treatment is rare in China. In many cases, wastewater is simply discharged into rivers and lakes, which has contributed to a rapid deterioration of water quality in recent years. The lack of effective measures to stop or slow urban water pollution has exacerbated China's problems with freshwater supply. The longer China waits to develop a functioning waste disposal and wastewater treatment infrastructure, the more complicated - and costly - it will become to provide its rapidly growing urban population with clean drinking water.

Only since the early 1980s have the major cities begun to implement modern water supply and sanitation facilities. It was estimated that between 1981 and 1993 the annual investment in urban public water facilities increased from just 365 million to 5,948 billion yuan (United Nations ESCAP, 1997, p. 23). However, the measures so far have been insufficient. Smaller cities and towns in rural areas, in particular, still have only very basic wastewater treatment facilities. The capacity of public water supplies in the rapidly growing urban-industrial agglomerations (e.g., Guangdong) needs to be increased dramatically.