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China will invest 29.65 billion yuan (US$3.85 billion) this year to reinforce dams and improve rural drinking water quality, a report said on Monday.

Among the total investment, 3.2 billion yuan would be spent on the reinforcement of reservoir banks, the Xinhua news agency said, quoting a senior official from the Ministry of Water Resources.

Chinese media has warned that thousands of reservoirs in need of repair are like "time bombs" threatening nearby villagers with floods in the event they burst their banks.

"The investment will be put to deal with the problems that the common people care about the most," the report quoted the water resources official as saying.

More than 6 billion yuan would be used to resolve issues concerning safe drinking water for rural residents, a problem that affects about 300 million people, the report said.

Increasing industrial waste and sewage discharge, as well as heavy use of pesticides and fertilizer, has resulted in drinking water being contaminated in many parts of the countryside.

The investment also included money for a scheme to transfer water from the south of China to the parched north, the report said.