By Francis Markus BBC correspondent, Shandong, China

The country hopes to solve the problems of drought in the north, and flooding in the south, with a massive water diversion project.

Floods cause immense social and environmental problems in China

Costing tens of billions of dollars, it will channel water north from the Yangtze river to the dwindling Yellow river.

It is going to be desperately needed but it may not be enough in itself.

In a market village in the eastern province of Shandong, the local blacksmith hammers away at a farm tool he is repairing, while his wife pumps the bellows.

Despite China's rapid modernisation, there are some things that have not changed much over the centuries.

Yet the pattern of continuity is being seriously threatened here, as over vast areas of northern China, by worsening water shortages.

All over this landscape, villagers are seeing their harvests reduced by drought as water supplies from the Yellow river dwindle.

One farmer told me that the water situation has been getting worse and worse; he is no longer able to plant wheat and maize - just cotton these days.

Even when the harvests are disastrous they still have to pay their local taxes.

"People are having to dig wells," said another farmer, "but for some families the cost is just too high."

"They are regretting having filled in the wells which they dug decades ago when there was plenty of water in the Yellow river," he said.

And here is the root of much of the problem - the Yellow river.

As farm vehicles clatter across a pontoon bridge, Mr Xie, a local resident, points out the diminished presence of the once mighty waterway.

He says the water used to reach halfway up the embankment. Now it is pitifully reduced.

What that means in practise is that, here at the roadside irrigation ditches, it is becoming more and more difficult to get enough water out.

And some experts fear that in the coming years the water shortage could seriously affect China's food situation and make the country require grain imports on a massive scale.

The Chinese Government is investing tens of billions of dollars in measures to ease the problem.

The 'North to South Water Transfer Scheme' is China's biggest ever construction project.

The mechanical diggers in front of me are scooping out the earth to dig a channel which will eventually extend for hundreds of kilometres to the south.

The channel will relieve the constant flooding of the Yangtze river and bring help to the dwindling Yellow river and the parched lands which surround it.

But the question is: How will this region survive on less and less water during the lengthy construction period?

Moreover, huge infrastructure projects like this will not in themselves solve the problems, unless they are accompanied by measures to encourage more economical use of water.

Mr Gao is the head of the water conservation office in the provincial capital Jinan.

He said that he thinks that as well as encouraging people to recycle water, the cost of water to the consumer also needs to be doubled.

"That is the plan, both to encourage water saving and to help recoup some of the massive cost of the construction project," he said.

But even so, the next few years are likely to be critical.