Shanghai started work on a new water supply source for the city this week as the authorities announced the local government would spend at least 40 billion yuan on infrastructure for environmental protection projects by 2009.
In its annual report on environmental conditions, the local environmental protection agency said on Tuesday the city's water quality remained stable last year, despite mounting concerns over drinking water after nearby Wuxi reported contamination of its main source.
Shanghai, 128km southeast of Wuxi, was not affected by the algae outbreak in Tai Lake, because it mainly uses the Huangpu River to supply drinking water.
The Shanghai Daily said on Tuesday a reservoir being built at the mouth of the Yangtze river would ensure clean tap-water supply for city residents by 2010.
Shanghai would build new sewage plants and upgrade existing ones to allow it to increase daily sewage treatment capacity to 80 per cent, the newspaper said. The environmental report said the city's treatment plants processed around 4.9 million tonnes of sewage last year, with 71 per cent of urban sewage undergoing treatment.
Shanghai's environmental protection spending reached a record 31 billion yuan last year, the environmental report said, more than 3 per cent of the city's annual gross domestic product.