Mainland China is a country that suffers one of the severest water shortages in the world. This problem has become a great challenge to China’s survival and further development. The distribution of water resources in China is very uneven, with abundance in the South and East and scarcity in the North and West. The efficient distribution and effective management of water resources to solve the shortage problems has become a priority in national policy making. Chinese Communist authorities place great emphasis on this challenge and hope to uncover the various factors leading to the shortages, including inequitable distribution of water, lax management, over-development, inefficient irrigation system, environmental pollution, and waste of resources. A new amendment on water law has been proposed to promote the transfer of water from the South to the North, as well as to encourage water saving policies and devices, and to protect water resources. All these steps are aimed at solving water shortage problems and to pursue sustainable use.