Economics & Development

Over the past several decades, China has made remarkable progress in addressing one of the most fundamental constraints to its development: water scarcity. With only six percent of the world’s freshwater resources and a fifth of the global population, China’s ability to support its economic growth, urbanization, and agricultural productivity has depended on a strategic, systematic approach to managing water. The success of this first water transition, anchored in strong governance, major infrastructure investments, and national policy innovations such as the 'Most Stringent Water Resources Management Policy' and 'Water as a Rigid Constraint', has laid a foundation that few other countries have matched. Yet, China now stands at a turning point. New pressures, including mounting demand across sectors, intensifying climate risks, and ecosystem degradation, are testing the limits of existing systems. These challenges have been brought to the fore by a new national ambition: the construction of an ecological civilization. This vision places ecological sustainability at the center of the country’s development path and requires a fundamental rethinking of water’s role in that transformation. This joint study by the World Bank and the General Institute of Water Resources and Hydropower Planning and Design at China’s Ministry of Water Resources (GIWP/MWR) traces the foundations of China’s water governance, explores new pressures and emerging paradigms of ecological water management, and provides a roadmap for future reform by introducing the Water–Human–Economy–Nature (WHEN) Nexus as a framework for China’s second water transition. The WHEN Nexus builds on China’s successes, addresses remaining challenges, and offers a unifying approach to integrate water’s multiple roles in society, the economy, and ecosystems, placing water at the center of China’s path toward resilience, sustainability, and ecological civilization.