China has made remarkable progress in expanding its urban water supply and wastewater infrastructure since 1990. However, as the country is experiencing the greatest wave of urbanization in history, providing urban water services to new residents and dealing with new spatial patterns of urban development, particularly in booming metropolitan areas, will be a demanding task. The disparities between cities of high and low capacities have created segments in the urban water market. National policies, standards, and approaches for urban water services will need to be tailored to meet the local economic and environmental reality. Addressing future challenges will require not only more investment, but new approaches to enhance governance and regulation, boost utility operational and financial performance, increase user fees, ensure adequate fiscal support, and explicitly recognize the constraints facing lower capacity cities and towns. A recent World Bank study titled Stepping Up: Improving the Performance of China's Urban Water Utilities reviews China's accomplishments in providing urban water services, identifies the major challenges, and recommends directions for the future. It aims to provide an assessment of where the sector stands today and to create a strategic framework for policy discussions, project design, and reform efforts. Five interrelated themes are the center of the strategic framework: I. Adopting Goal-based Sector Governance In the past, performance of China's water sector was measured by achievement of physical targets. The focus for the future should be on utility performance, including improving the environment, protecting public health, and providing good quality service to all at reasonable cost. This study recommends the Cover of the English version of the report. The Chinese version has been translated and will be published in January 2008.
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