The quality of groundwater or surface water is a major problem in China, be it because of man-made pollution or natural contamination.
Waterbodies are polluted through continuous emissions as well as spills during emergencies. Continuous emissions are from industrial and municipal point sources, as well as from nonpoint sources such as pesticides and fertilizers.
According to China's State Environmental Protection Agency (SEPA) in 2006 60% of the country's rivers suffer from pollution to such an extent that they cannot be used as drinking water sources. There has been no significant improvement on the previous year.
According to the 2008 State of the Environment Report by the Ministry of Environmental Protection, the successor agency of SEPA, pollution of specific rivers is as follows:
Nevertheless, according to SEPA, the water quality in the central drinking water sources for major cities was "mainly good".
There have been a high number of river pollution incidents in recent years in China, including the high profile Songhua River toxic chemical spill in November 2005 following an explosion at a Jilin chemical plant in November, 2005, and drinking water source pollution by algae in the Tai Lake, Wuxi in May 2007. In the latter case there was a "bloom of blue-green algae that gave off a rotten smell" shutting off the main source of drinking water supply to 5.8 million people. By September 2007, the city had closed or given notice to close more than 1,340 polluting factories. The city ordered the rest to clean up by June or be permanently shut down. The closing of the factories resulted in a 15% reduction of local GDP. The severe pollution had been known for many years, but factories had been allowed to continue to operate until the crisis erupted.
According to a 2007 report by the World Bank, the pollution scandals demonstrate that, if not immediately and effectively controlled, pollution releases can spread across boundaries of administrative jurisdictions, causing "environmental and economic damage as well as public concern and the potential for social unease". Once an accident has occurred, the impact on the environment and human health becomes more difficult and more costly to control. Therefore, the report recommends prevention of pollution by strict enforcement of appropriate policies and regulations.
Large portions of China's aquifers suffer from arsenic contamination of groundwater. Arsenic poisoning occurs after long-term exposure to contaminated groundwater through drinking. The phenomenon was first detected in China in the 1950s. As water demand grows, wells are being drilled deeper and now frequently tap into arsenic-rich aquifers. As a consequence, arsenic poisoning is rising. To date there have been more than 30,000 cases reported with about 25 million people exposed to dangerously high levels in their drinking water. 
According to the WHO over 26 million people in China suffer from dental fluorosis (weakening of teeth) due to elevated fluoride in their drinking water. In addition, over 1 million cases of skeletal fluorosis (weakening of bones) are thought to be attributable to drinking water.  High levels of fluoride occur in groundwater and defluoridation is in many cases unaffordable.
China's water resources include 2,711.5 cubic kilometers of mean annual run-off in its rivers and 828.8 cubic kilometers of groundwater recharge, as of about 2000. As pumping water draws water from nearby rivers, the total available resource is less than the sum of surface and groundwater, or 2,821.4 cubic kilometers. 80.9 per cent of these resources are in the Yangtze River basin.
Total water withdrawals were estimated at 525.5 cubic kilometers in 1993, or 20% of renewable resources. This average however masks important temporal and spatial variations in supply. Demand is from the following sectors:
In 1993 498,720 square kilometers were irrigated.
Over-extraction of groundwater and falling water tables are big problems in China, particularly in the north. According to the Ministry of Construction, preliminary statistics show that there are more than 160 areas nationwide where groundwater has been over-exploited with an average annual groundwater depletion of more than 10 billion cubic meters. As a result, more than 60,000 square kilometers of ground surface have sunk with more than 50 cities suffering from serious land subsidence. There is also increasing competition for surface water and the Yellow River is so over-exploited that in many years it does not reach any more the Sea. Flooding also still is a major problem.
Large-scale water transfers have long been advocated by Chinese planners as a solution to the country's water woes. The South-North Water Transfer Project from the Yangtse River to the Yellow River and Beijing.
The development or diversion of major transboundary rivers originating in China, such as the Brahmaputra River and the Mekong River, could be a source on tension with China's neighbors. For example, after building two dams upstream, China is building at least three more on the Mekong, inflaming passions in Vietnam, Laos, Cambodia and Thailand. In a book titled "Tibet's Waters Will Save China" a group of Chinese ex-officials have championed the northward rerouting of the waters of the Brahmaputra as an important lifeline for China in a future phase of South-North Water Transfer Project. Such a diversion could fuel tension with India and Bangladesh, if no prior agreement would be reached on sharing the river's water.
Several authorities have responsibility for dealing with water. Water pollution is the responsibility of the environmental authorities, but surface water itself is managed by the Ministry of Water Resources. Urban water supply and wastewater is dealt with by the Ministry of Construction, but groundwater falls within the realm of the Ministry of Land and Resources.
Ma Xiancong, a researcher at the Chinese Academy of Social Sciences Institute of Law, identified these areas where the government failed to act, or tacitly consented, approved or actively took part and so creating a worse situation: Land appropriation, pollution, excessive mining and the failure to carry out environmental impact assessments. An example of this emerged in 2006, when the State Environmental Protection Administration revealed over a dozen hydroelectric projects that had broken the Environmental Impact Assessment Law.