The diversion of water to Beijing for the Olympics and big hydropower projects threatens the lives of millions of peasant farmers in China's north-western provinces, a senior Chinese government official said. In an interview with the Financial Times, An Qiyuan, chairman of the Chinese People's Political Consultative Committee for Shaanxi province and former Communist party chief of Shaanxi, warned of an impending social and environmental disaster because of overuse of scarce water resources.

In a critical tone seldom heard from Chinese officials, Mr An called on Beijing to provide compensation to the provinces that have been told to pump their cleanest water to the capital to ensure potable supplies during the Olympics. Beijing will need about 300m cubic metres of additional water just to flush out the polluted and stagnant rivers, canals and lakes in its central areas to put on a clean, environmentally-friendly face for Olympic visitors, according to municipal officials.

"In order to preserve the quality of Beijing's water we have to close all our factories. But we still need to live. So I say the government needs to compensate Shaanxi," Mr An said. He called on the government to remove hydropower projects on the Yellow River - particularly the Sanmenxia Dam built in the 1950s - which he blamed for flooding, worsening pollution and dwindling water supplies.

The average annual per capita water supply in China is 348 cubic metres, well below the global average and the United Nations definition of "water shortage", which is anything below 1,000 cubic metres. Beijing's supply is even lower, at 235 cubic metres. Many experts say these shortages are exacerbated by artificially low prices set by the government.

"Beijing is facing a water crisis and it is fighting for water with neighbouring cities, including Tianjin and Zhangjiakou," said Wang Jian, a Beijing government employee and activist on water issues. "The price of water does not reflect its true value, but the government has decided to control the price in order to maintain a harmonious society in the run-up to the Olympics." The government has launched a $60bn (£30bn) "south-to-north water diversion project" that will channel about 1.2bn cubic metres of water a year from wetter southern provinces to the north.

(By Jamil Anderlini, Financial Times, 27/02/2008)