The first water-use rights trading case took place in eastern China's Zhejiang Province in February 2001. The municipal government of Yiwu City bought the permanent use rights for 50 million cubic meters of water from a neighboring city for 200 million yuan.

Water-use rights, which used to be solely owned by the State, now are allowed to be sold and purchased.  The proprietary rights to water resources will still be in the State's hands. Private companies or individuals may share the water-use rights with State-owned counterparts.

In the past water resources were not considered a kind of commodity that can be traded, as China managed water resources and developed water supply completely as a public resource rather than as a profitable businesses.

Traditional water management policy is considered a major cause of  water waste prevailing in many parts of China.  This is the first step to reform the management approach to water resources in the PRC.

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