Water shortages in important grain-producing regions of China may significantly affect China's agricultural production potential and international markets. Falling ground-water tables and disruption of surface-water deliveries to important industrial and agricultural regions have provoked concern that a more dramatic crisis is looming unless effective water conservation policies can be put into place rapidly. While China's water use is unsustainable in some areas, there is substantial capacity to adapt and avert a more serious crisis. Recent changes in water management policies may serve to bring about more effective water conservation. This report provides an overview of these changes and some analysis of their effectiveness. Wheat is the most likely crop to show a fall in productiondue to water shortages, but cotton, corn, and rice may also be affected.