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Desiccation of the Yellow River, the cradle of the Chinese civilization and the second longest river in China since the 1970s, has created serious socioeconomic, environmental and ecological problems. This paper analyzes the water shortage problem in the Yellow River and evaluates the effects of demand management and the interbasin transfer -South Water Northward Transfer Project - in alleviating the problem. Although China has initiated a series of demand management and pollution control initiatives, these programs alone cannot solve the chronic water shortage problem in the Yellow River Basin. While facing multiple challenges and controversies, implementation of the South Water Northward Transfer Project is necessary to mitigate the water shortage crisis in the Basin. However, the implementation of the Transfer Project is only a partial solution to the Yellow River chronic water shortage problem. China should actively implement and enforce its demand management programs and pollution control policies to make sustainable use of its limited fresh water resources. [ABSTRACT FROM AUTHOR]