Beijing tackles water shortages with grand plan to divert Yangtze

"This used to be wasteland," Dragon Li said of the lush fairways lining the Grand Canal Golf Club outside Beijing. Yet nature still threatens Mr Li's project, which was wrought with irrigation and fertiliser four years ago on the sandy banks of the world's longest, oldest man-made waterway.

"The rivers and wells ran dry this summer," he admitted from the mock-imperial splendour of the golf clubhouse, "but things may get better once the south-north water transfer project is finished."

Some 1,400 years after a ruthless Chinese emperor built the Grand Canal, connecting waterways already one millennium old, the Communist Party is pushing ahead with Chairman Mao's grandiose plan to build three more channels. The 500bn Chinese yuan (£43bn) project will divert water from the Yangtze river in the flood-prone south China to millions of peasants, and Li's fatcat clients, on the parched plains of the north.

Despite concerns among environmental experts that cheaper, safer alternatives are being overlooked, officials in Beijing announced yesterday they are embarking on this radical, 50-year-old solution to China's worsening water crisis. Up to a million people may be resettled to make way for three channels linking the Yangtze to the Yellow, Huai and Hai rivers.

Opponents fear the diverted water will be too polluted and expensive to divert. But once China's cabinet approves the plan in December, construction will begin next year on the 1,150km (715 miles) eastern and 1,246km (774 miles) central routes, which are slated for completion by 2010. The western and most costly leg – from the Tibetan borderlands in the south-west – is still on the drawing board.

Zhang Jiyao, the deputy water resources minister, said: "China's water resources per capita are only one quarter of the world's average. Water and land resources are not only insufficient in volume, but also unevenly distributed, with sufficient water and insufficient land in the south, but sufficient land and scarce water in the north." Half of China's 1.3 billion population lives in the north of the country.

At least 400 of China's 668 cities suffer from water shortages because of drought, mismanagement and excessive exploitation. Shanghai is sinking because its underground water is being overused, while Beijing announced this week that it was introducing fresh curbs on water use in the city. Gobi desert dunes are advancing towards the Chinese capital, and the Yellow river, the cradle of Chinese civilisation, dribbles dry before reaching the Yellow Sea.

The new project, on the scale of the building of the Great Wall, will siphon off about four per cent of the Yangtze river's run-off, channelling it northwards through massive aqueducts. While the eastern route will piggyback along the venerable Grand Canal, the central route involves constructing a 10km (6 mile) water tunnel under the Yellow river.

Three million labourers and convicts may have died building the first Grand Canal. Casualty figures should be lighter this time, but corruption will exact a heavy toll. The Ministry of Water Resources is renowned as one of Beijing's most corrupt departments, and its Three Gorges Dam project, mired in graft and controversy, provides an unhappy precedent. Environmental costs could also be high.

Wen Yibo, the president of the environmental technology company Sound Group, said: "When water is diverted, much is wasted en route, and the channels may become polluted rivers as many cities en route have little pollution treatment. There are more urgent and cheaper methods that could replace water transfer. To divert one tonne of water costs six to 10 yuan, but treating waste water to the same quality level costs three to four yuan."

Activists including Liang Congjie, the head of Friends of Nature, want the government to stop well-digging, and to fix leaky faucets. But this regime, like its ancient forbears, is loath to shirk the grand gesture or miss a symbolic chance to conquer nature. Besides the ongoing construction of the world's largest hydroelectric dam, Beijing began this year to construct the world's highest railway track, across the frozen Tibetan plateau.

After years of minimal water charges, prices will increase to teach consumers the value of conservation. The deputy water minister, Mr Zhang, said: "I have just returned from the United Kingdom, where a friend told me he pays £100 a month for water, of which 19 per cent is for sewage treatment. Chinese people need to realise that the cost of the sustainable development of the environment must become part of the concept of consumption."