BEIJING - The Asian Development Bank (ADB) and Beijing Enterprises Water Group, one of China's leading water infrastructure operators, signed an agreement Wednesday granting the latter $240 million in loans from the ADB.

The loans will be used to treat an additional 600 million tons of wastewater annually by the year 2019 through upgrades to wastewater treatment plants. The upgrades will allow the plants to meet the grade 1A standard, which means the water can be reused for industry cooling, watering city gardens, and other uses, according to an ADB statement.

The ADB's support consists of a direct loan of 120 million U.S. dollars for the Beijing-based company and its subsidiary, BEWG Environmental Group, and a complementary loan of 120 million U.S. dollars to be funded by commercial banks.

In addition, the Manila-based ADB also announced technical assistance worth 500,000 U.S. dollars, which aims to help promote the reuse of wastewater in cities across China.

The ADB said in the statement that China is encountering water challenges due to rapid urbanization.

More than 400 cities have reported water shortages, with an average daily shortfall of 16 million cubic meters, equivalent to the average annual consumption of about 160,000 people. Per capita freshwater resources are scarce and annual per capita water endowments have been declining at an alarming rate.

Extensive water pollution is further reducing the availability of freshwater, the bank added.

Beijing Enterprises Water Group, which is listed in Hong Kong, builds sewage treatment, reclaimed water treatment and seawater desalination plants in the Chinese mainland.