External assessment of China's water problems, and recommendations for policy solutions, often fail to recognize interrelated physical, institutional, historical-cultural, and ideologically-grounded contradictions in the water sphere, distinctive to China, that challenge Chinese policy makers in unique ways. Is new market-based approaches to flood and drought prevention and control, water quality maintenance, adequate water supply, and ecological support are being discussed and implemented, problems of overcoming deep-seated contradictions in the water economy compel searching review of policy assumptions and strategies which force reconsideration and modification of longstanding strategies and procedures for managing water resources. This paper considers the implications of water policy contradictions and challenges in four key areas: (1) coordination of economic measures and legal constraints associated with a 1988 Water Law; (2) a major 1999 policy shift from emphasis on strutural engineering solutions in shuili (water management) enterprise to a broader resource-defined concept of "resource" water management (ziyuanshuili) in support of water sustainability; (3) continuing reference to traditional historical/cultural and Marxist theoretical perspectives despite increasing adoption of Western market-based instruments in water policy development; and (4) problems of modifying and adapting indigenous water science and engineering in the process of building a new water economy. The paper concludes that bilateral and multilateral efforts to ameliorate China's water problems may be successful in achieving limited technical objectives in the several water sectors but face difficulties in contributing to China's long-term water sustainability and hazard mitigation because they are insensitive to internal contradictions that are being addressed with ever greater intensity and urgency in the quest for solutions.
