This report represents a synthesis ofjoint research conducted by the Development Research Centerof the State Council of the People's Republic of China(DRC) and the World Bank. Building on the track record ofresearch collaboration between the World Bank and the DRC onissues such as urbanization, the objective of the study isto provide Chinese policy makers with detailed institutionaland policy options to support water security in the country.This study fills a critical gap highlighted in the WorldBank 2013 China Country Water Resources Assistance Strategyby proposing legal, technical, and institutional changes tothe current framework for water resource management. A newwater governance approach is recommended that aims tobalance economic growth with increasing water demand underconditions of water scarcity. By closely examining key watermanagement issues in the context of China's rapiddevelopment, the study also aims to provide lessons relevantto other low- and middle-income countries facing similarwater-related challenges. The report identifies fivepriority areas for reform: 1) Enhance the legislativefoundation for water governance; 2) Strengthen national andbasin-level water governance; 3) Improve and optimizeeconomic policy instruments; 4) Strengthen adaptive capacityto climate and environmental change; and 5) Improve datacollection and information-sharing.