China to spend $65 billion to improve water supplies: ministry

August 9, 2016 3:07 AM EDT

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SHANGHAI (Reuters) - China plans to spend a total of 430 billion yuan ($65 billion) on around 4,800 separate projects aimed at improving the quality of its water supplies, the environment ministry said late on Monday.

The Ministry of Environmental Protection said in a notice on its website ( that the central government had already allocated funds of 13 billion yuan for 2016, which will be used mainly to improve urban drinking water and prevent pollution in China's major rivers.

The notice did not give a timeframe for the projects.

China is spending heavily to improve the quality of its water supplies as it tries to reverse the damage done by unregulated chemical run-offs, untreated wastewater and the excessive use of pesticides and fertilisers.

Nearly two-thirds of its underground water and a third of its surface water is deemed unsuitable for human contact, according to a survey published last year.

To meet its objectives to tackle water pollution, China will also set up an incentive system that will reward provinces for completing projects on time and cut funding to those regions that fail to spend their allocations, the ministry said.

China has struggled to create the incentives to persuade local governments to build water treatment plants that are expensive but have a limited impact on local economic growth. Fears stemming from China's crackdown on corruption have also slowed local infrastructure spending.

($1 = 6.6621 Chinese yuan)

(Reporting by David Stanway; Editing by Richard Pullin)

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