In this chapter, we introduce the institutional and empirical context of China’s water sector reforms, with a focus on the rural-urban disparities in water access, human capital, and income. We highlight the health and developmental consequences of unsafe water in rural areas, despite the widespread practice of boiling water. We also discuss the challenges facing urban water systems amid rapid urbanization, including infrastructure constraints, resource scarcity, and the introduction of private sector participation and water pricing reforms. This chapter motivates our study of water policy as a driver of human capital development and water conservation in China. We outline the data sources, describe key policy interventions, and present the research framework that links water sector reforms to outcomes in health, education, utility performance, and household behavior, providing the foundation for the analyses in the following chapters.