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KAI RYSSDAL: Chinese Premier Wen Jiabao got on a plane for Tokyo, Japan this morning. It's a rare meeting between the leaders of the two countries. There are tensions between them going back 70 years or more. But Wen and Japanese prime minister Shinzo Abe are planning to announce at least one area of agreement — on global warming. Specifically, what to do about it when the Kyoto Protocols expire in 2012.

China doesn't hold to the Kyoto emissions limits. Neither does the U.S., of course. And in both countries, environmentalists are raising all manner of red flags. Marketplace's Scott Tong reports now from south-central China on the looming problem of water supply.

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SCOTT TONG: Mr. Kung fishes for a living at Dongting Lake. It's China's second-biggest in an agricultural hub on the Yangtze River.

Kung is 45. He cusses.

[SOUND: Mr. Kung ranting]

He rants about how fishing's awful these days, 'cause of water pollution. And how the [bleep]ing Communist party does nothing about it.

MR. KUNG (voice of translator): They talk about protecting Dongting Lake, but they don't mean it. They don't care about the common people, just the rich and powerful.

Rich as in the [bleep]ing paper industry, he says — the mills that dump waste into the lake.

This fisherman says that kills the ecosystem. And his livelihood.

KUNG: My family has fished for seven generations. Hundreds of years of history. But the fish are gone. My son has left — gone to the coast for migrant work.

[SOUND: Engine starting up]

He ferries us over to a narrow canal, filled with paper factory leftovers. The water's dark brown. It reeks.

Local officials say 101 paper mills operate on this lake. And just two of them meet environmental standards for wastewater.

MA JUN: Basically, they turn all these rivers and lakes as their natural sewers.

Environment activist Ma Jun is the author of the book "China's Water Crisis."

JUN: You see a very rapid deterioration of certain rivers and lakes, specifically due to the paper industry.

Half of China's rivers are deemed too polluted to drink from. And more than a hundred Chinese cities face what authorities call "severe" water shortages.

The main problem is, there's just not enough of it to start out with. So the farmers, the fishermen, the power plants and the battery factories can't always operate full-bore.

David Dollar heads the China office of the World Bank.

DAVID DOLLAR: There will definitely be some costs. You know, it will probably reduce the economic growth rate to some extent. So there're trade offs. And people are having a very active debate about that.

The World Bank thinks the cost of pollution and resource shortages shave off 8 to 12 percent of China's GDP. That drags on the global economy.

But here's the rub for many Americans. Farmers like these are leaving the countryside by the millions, no longer able to coax crops out of parched soil. So they're taking jobs in factories that, in some cases, compete directly with American companies.

David Dollar.

DAVID DOLLAR: And that's the source of this pretty endless supply of workers coming to cities, who work at what seem like very low wages in the manufacturing sector.

China's water crisis has been a long time in the making.

In the 1950s, retired communist soldiers sang "We Workers are Powerful" as they swarmed the river banks, siphoning water for farms and factories.

Political philosopher Daniel Bell of Tsinghua University says it was part of a larger Marxist ideal.

DANIEL BELL: The environment is there for humans to use for their own purpose — in particular to improve their productivity. And the idea that we need to worry about the long-term consequences regarding the environment or the ecology was not taken very seriously.

It is now. Local officials near Dongting Lake this month shut down scores of small, dirty paper mills. But will they stay closed?

Benjamin Van Roy of Holland's Leiden University researches legal compliance in China.

BENJAMIN VAN ROY: A lot of them, they are closed down officially, the gates are sealed. And then operations start again. So what happens since 2002 or '3 is the authorities eventually used dynamite to completely destroy these factories.

Destroy the factory to save the lake. Drastic measures for drastic environmental times. At least, when it comes to China's most valuable liquid asset.

In Hunan, southern China, I'm Scott Tong for Marketplace.

Location of China's Dongting Lake (Google Maps)