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This paper analyses the present condition of the water shortage in north China where annual rainfall is low and per capita water resource is below the line of regular water stress, or even the line of absolute water scarcity. Of the available water resources, the percentge of water withdrawal in all the north basins is high - the Yellow River and Huai River basins being greater than 80% and the Hai River basin mainly depending on interbasin water transfer. Over-withdrawal of water also results in serious water environmental problems including ‘flow cut-off’ of the Yellow River main channel and water pollution of many rivers. The paper also analyses the potential of wastewater as a resource and the demand for treated wastewater re-use. In north China, due to low rainfall and high potential evaporation environmental re-use, gardening, afforestation, etc. is considered as the main usage of the treated wastewater. Considering the economic restrictions in the less developed area, a decentralised system can be taken as an important option in formulating water re-use strategies. [ABSTRACT FROM AUTHOR]