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The research paper delves into the environmental challenges arising from China's rapid economic growth, highlighting issues like water shortages and pollution. Despite improvements in water infrastructure, the situation continues to deteriorate, prompting the government to pursue sustainable development through reforms, private-sector participation, and significant financial investments. However, the paper also addresses the complexities investors face, particularly regarding the legal environment, where stringent regulations are often not enforced. It analyzes the implications of these factors on foreign investment in China's water sector.

The thesis examines China's economic growth following the Open-Door Policy, highlighting significant increases in GDP and per capita income. However, it raises critical concerns regarding the sustainability of this growth, particularly focusing on the strain it places on water resources. Issues such as water shortages, pollution, declining groundwater levels, and the impacts of floods and droughts are explored, emphasizing the hidden costs associated with rapid economic development in China.