Pii: S0011-9164(04)00191-2

China is a country with severe water shortages. Water is becoming scarcer due to population growth, industrialization and urbanization. Recent studies show that by the next 50 years water resources per capita will go down to around 1700 m 3, which is the threshold of severe water scarcity. Especially in North China, water shortage has become a critical constraint factor for socioeconomic development in the long run. To solve or eliminate water shortage problems, seawater desalination draws more and more attention as an alternative water supply source. The objective of the study is to assess the potential of desalination as a viable alternate water source for China through analysis of the costs of desalination, the water demand and supply situation as well as water pricing practices in China. Based on the investment costs and estimated operation and maintenance costs, an economic appraisal for the costs of desalination for two main processes, MSF and RO, has been conducted. The study shows that there is a decline of unit cost of desalination over time and the average unit cost of the RO process was lower than that of the MSF process. A unit cost of 0.6 $ /m 3 for desalting brackish water and 1.0 $ /m 3 for seawater are suggested to be appropriate for the potential application of desalination in China. Future trends and challenges associated with water shortages and water prices are discussed, leading to conclusions and recommendations regarding the role of desalination as a feasible source of water for the future.