This report presents the outcome of theWorld Bank's analytical and advisory work to assess thestatus of water resources development and the key waterissues and challenges facing the country. The Bank has alsoreviewed its history of cooperation with the Government ofChina in recent decades, and notes the remarkableachievements China has made in developing the water sector.The report proposes solutions for tackling the enormouschallenges facing China in the sector. The central priorityis to ensure sustainable utilization and management ofwater, land and related resources at the national, basin,regional and local levels. Despite relatively poorendowments of land and water by international standards,China's economy has developed extremely rapidly overthe last three decades, supporting 21 percent of theworld's population with 9 percent of the world'sarable land and only 6 percent of the world's waterwhile simultaneously lifting some 400 million people out ofpoverty. It is noted in the national water resources masterplan recently completed by the Ministry of Water Resources(MWR) and the National Development and Reform Commission(NDRC) that China's water resources are under stressfrom the combined demands of agriculture, industrialization,urbanization, population increases and improving livingstandards. The impact is evident in regional falling watertables, inadequate flows to the environment, pollution, andso on.