Dealing with urban diversity. Different types of cities pose different economic and environmental issues. The study divides China’s cities into two groups to help facilitate policy analysis. In 2005, 150 “high-capacity cities” had a total population of 200 million. Included in that category are cities with per capita GDP of more than RMB 24,000 ($3,000), and those with a population of at least 500,000 people and a per capita GDP of more than RMB 12,000 ($1,500). Low-capacity cities are all other cities and towns in China, with a total population of around 400 million. The concept of highand low-capacity cities, devised to facilitate policy discussion, underscores that some cities can aspire now to standards of urban water services enjoyed by high-income countries, whereas others face constraints typical of lower-middle income countries around the world.