China needs to divert more water to its arid northern regions and invest more in water infrastructure as shortages get worse because of pollution, overexploitation and rising population levels, Premier Li Keqiang has said.

China’s per capita water supplies are around a quarter of the global average. With demand still rising, the government has sought to make more of scarce supplies by rehabilitating contaminated sources and improving efficiency.

Water remains one of China’s major growth bottlenecks, and persistent droughts this year underlined the need to build new infrastructure, Li told a meeting of senior Communist Party officials on Monday. An account of the meeting was published by China’s official government website.

Local government bonds should be “tilted” in the direction of water infrastructure, he said, and innovative financing tools were also needed.

He also called for research into new pricing policies to encourage conservation.

He said opening up more channels to deliver water to regions north of the Yangtze River Delta will support economic and social development and optimise China’s national development strategy, according to a summary of the meeting on the government website.

China is in the middle of a wide-reaching programme to clean up the Yangtze River, its biggest waterway, and put an end to major development along its banks.

Chinese Premier Li Keqiang inspects an empty reservoir during a visit to Jiangxi province last week. Photo: Xinhua

Local governments have been under pressure to dismantle dams, relocate factories and even ban fishing and farming in ecologically fragile regions.

But experts say the ongoing campaign to divert the course of the Yangtze to other regions is still causing long-term damage to the river’s environmental health.

Many cities that have polluted their own water sources have drawn replacement supplies from the Yangtze, exceeding the river’s environmental capacity, said Ma Jun, founder of the Institute of Public and Environmental Affairs, which monitors water pollution.

Beijing already relies on diversion channels from the Yangtze to supply 70 per cent of its water, but has done little to improve conservation or reduce per capita consumption, which is higher than many western countries, he said.

“[Diversion] has caused so much suffering and needs so many dams to keep up supply, and that has impacted biodiversity,” he said.