When it comes to China’s environment around major cities I assume it to be polluted until proven otherwise. In this case it seems we have either very vague or anecdotal evidence, which is not much of a surprise. The air is obviously polluted, but the government states that it’s “Acceptable”, while equipment at the US Consulate said it is “Very unhealthy”, reaching over 200 today. The precedent of China underestimating the severity of pollution is well established, and understandable, and I see no reason to believe why water quality is any different. I don’t see much of a practical advantage to drinking water out of the tap here anyway when water gets delivered to your door at about $2 for a weeks supply.
But to bring this tangent back to the original topic – I think that the condition of China’s environment poses a serious threat to the potentiality of it becoming a country where people will want to flock to in the future, as Ray suggested.