The undulating hills of Ningxia have been home for Hai Zhengjun ever since he chiselled out a cave shelter on the side of a ridge with a pickaxe and shovel in the 1970s.

The 64-year-old has learned never to take water for granted, having spent all his life rearing sheep and sowing crops of wheat and corn in an area environmentalists identify as among China’s driest and most ecologically vulnerable.

The central and southern parts of the region, which sprawl across the Loess Plateau and are home to a sizeable ethnic Hui Muslim population, are highly prone to drought and desertification. With the dry conditions exacerbated in recent years, scientists say, by the effects of climate change, the Chinese government has been ramping up a far-reaching resettlement project aimed at relocating hundreds of thousands of villagers into towns built from scratch and with ready access to running water.

Hai, an ethnic Hui, is yet to move, despite a prolonged drought two years ago which left his village without any water for 40 days straight.

“It’s a full hard day’s work,” he says of the 10-kilometre hikes he took to the next town to fetch water.

Water takes on particular ritual importance in these parts. Pulling out an ornate copper ewer, Hai demonstrates the cleansing of his hands and face before prayer; only a few precious drops of water are used.

Showers, a luxury indulged in about once a week, involve a half-filled vase-shaped plastic vessel hung from the ceiling, in the same fashion as an outback bucket shower. A small plastic basin catches every drop so it can be reused for watering.

But the strongest indication of the preciousness of water here comes when Hai, an impeccably generous host, serves us snacks of lightly fried dough with a pitcher of green tea, infused with locally grown goji berries.

The pitcher is filled barely a third of the way; and our host and his family do not touch a single drop.

The vastness of China and its variable climes present contrasting ecological problems linked with changing climate patterns. In the far-western reaches, environmentalists are documenting the effects of melting icecaps across the Tibetan plateau. Down south, climate scientists study an increase in heavy storms and the risks of rising sea levels on coastal cities.

But it is the large industrialised cities, where the factories, construction sites, and coal-fired power plants have fuelled the engine room of modern China’s surging economic growth, which are proving the catalyst for an urgent shift in the government’s environmental disposition.

China’s greenhouse-gas emissions were about 10 per cent of the world’s total in 1990. Now they are closer to one-third. China burns through nearly as much coal as the rest of the world combined; and since 1990 the country has accounted for more than 80 per cent of the global growth in carbon emissions.

In hindsight, the rancid smog that choked Beijing in early 2013 could go down in history as a game changer. A cloak of warm air in the atmosphere trapped a thick blanket of pollution above the country’s capital for weeks on end.

The air quality readings consistently hit levels more than 40 times what the World Health Organisation deems safe, sparking popular outrage.

China’s people are financially better off than ever before, but as Li Keqiang put it in his inaugural address as premier, “it is no good having prosperity and wealth while the environment deteriorates”. A study released by the National Academy of Sciences in the US found that air pollution in northern China reduces life expectancy by 5½ years.

The indications are that the ruling Communist Party is doing more than just paying lip service. There are already clear signs that China’s coal usage has peaked and is falling faster than previously imaginable.

China has banned the import of dirty coal and pushed large investments into renewable energy, including wind, solar and hydro. It is investigating ways to nationalise a string of pilot emissions-trading schemes already operating in various provinces.

And in November, it caught many international observers off guard by making a joint announcement on climate change with the United States, a strategic rival in almost every other respect. China intends to see its carbon emissions peak by 2030 and increase the share of non-fossil fuels in energy consumption to about 20 per cent in the same time frame.

This week, while on an official visit to France, Li formalised those announcements in China’s Intended Nationally Determined Contributions – the climate plan that the country’s negotiators will take to the year-end climate conference in Paris.

It also announced new carbon-intensity reduction targets – a reduction of between 60 and 65 per cent by 2030, based on 2005 levels.

“It’s huge. One can see how much power the US-China climate change joint statement … has generated in the climate change space,” says Li Shuo, of Greenpeace China. “We are in a very different world than a few years ago where you would basically have the US and China, the two biggest emitters, going tit for tat in the space of climate-change regulations.”

But many environmentalists fear that decades of headlong economic development has already wreaked irreversible damage, much of it less visible than China’s infamous smog.

A five-year nationwide study conducted by China’s environment ministry found nearly one-fifth of the country’s farmland was unsuitable for growing because of dangerous levels of chemicals like cadmium, nickel and arsenic.

Another government survey of the Yellow River, considered the lifeline of Chinese agriculture, found a third of the river’s length was too polluted to be used for growing food. In urban areas, a housing ministry study found only half of city water supplies were fit to drink.

But far away from the industrialised mega-cities which typify modern China, it is up in the villages perched upon the hills of Ningxia, where a key conundrum is neatly illustrated. Half of China’s population still live in rural areas, often cited by market bulls as the unfinished growth story of the Chinese economy. China continues to urbanise rapidly, and its economy needs to continue to grow at a healthy rate if standards of living are to continue to rise – a basic contract with its people for the stability of one-party rule.

The Communist Party has grasped the self-interest in achieving growth sustainably – the World Bank has estimated China’s environmental and natural resource degradation to have cost it the equivalent of 9 per cent of its gross domestic product.

The Ningxia government is directing significant subsidies at moving villagers away from areas of severe land degradation. The new settlements have electricity and heated water which runs on solar power.

But Hai Zhengjun’s adult son, Hai Hengdong, has already returned to his old village having been unable to find work.

Others have resisted the promise of greater economic opportunities in town, reluctant to give up a lifestyle they have become accustomed to.

Wang Liandong, 36, is one of the few younger men remaining in a village full of elderly faces. He says his friends have all moved into larger towns, “living in apartments and driving sedans”. But far from daunted by​ the tougher conditions brought on by drought, he is building a new home – the first in his family for 30 years.

“I can still survive here,” he says. “I’ll be here until I can’t.”