China will spend more than 1 trillion yuan (US$125 billion) over the next five years to improve water systems plagued by pollution and suffering short supply, a senior construction ministry official said yesterday.

Sewage treatment in urban areas will be a major focus, with more than 330 billion yuan targeted to this effort alone, Qiu Baoxing, vice minister of construction, told a press conference in Beijing.

China faces huge problems such as water shortages, increasing pollution and degradation of its rivers, he said.

Three major sources of pollution - urban sewage, industrial discharges and agricultural wastewater - are far from being effectively controlled, Qiu noted.

The government has admitted missing two targets in the country's 10th Five-Year Plan (2001-2005): energy costs and pollution curbs.

A state report shows Chinese factories use five to 10 times more water than the average in developed countries, in addition to other alarming news.

At the end of last year, 278 of China's 661 cities had no sewage treatment plants.

More than 50 water treatment plants in some 30 cities operated at below one-third of their capacity or were not used at all, as the construction of sewage collection pipeline networks failed to match the pace of processing capacity development.

Leaky pipes and the overuse of groundwater have made the problems worse, leading to severe subsidence in some cities, Qiu said.

To help raise funds for better treatment, sewage processing costs will be soon included in water prices. By the end of this year, a 0.8 yuan per ton increase in the price of water will be imposed on all urban residences throughout China, Qiu said.

Some southeastern coastal cities, including Shanghai, have already introduced the fee.

Work is also under way on a giant south-north water diversion project. Its middle and eastern lines will cost as much as 320 billion yuan, Qiu said.

A drought this summer in southwestern China's Chongqing Municipality and Sichuan Province left more than 18 million people short of drinking water.

Northern China, where a third of the country's population lives, also suffers from increasingly dry conditions, the official said.

China's per-capita water resources are less than a third the global average and are falling.

Qiu pledged that the country will renovate damaged distribution networks by end of next year. More than 95 percent of urban homes will have clean water by 2010, up from 91.1 percent at the end of 2005.

Editor: Yan