China faces its worst economic crisis: water

China has a serious problem, bigger than the slowdown in manufacturing growth or the housing-price bubble. It's water, and it's a catastrophe that could affect the rest of Asia and the larger world.

In testimony to the U.S. Senate last week, the Council on Foreign Relations' Asia director Elizabeth Economy said China is facing a water crisis with "profound implications" if the government doesn't get a grip on it over the next few years.

According to China's own water-resources officials, more than 400 Chinese cities lacked enough water last year, with 110 of those facing "serious scarcity."

The key culprit is industry, which Economy said uses 4 to 10 times more water per unit of GDP than similar economies and is polluting the nation's existing water resources at an alarming rate. She cited a February 2013 report by the Geological Survey of China saying a full 90% of the country's groundwater was polluted, while the Ministry of Environmental Protection said the water from about 25% of China's major river systems was so filthy that it couldn't be even used for industry or agriculture.

Tap water is mostly undrinkable, and those who do drink it run major health risks. And the contamination is making it into the food system, resulting in cadmium-tainted rice among other threats, she said.

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