Beijing plans to spend 49 billion yuan on a programme to revive the historic Grand Canal as an important north-south waterway.
Under the project, new restrictions on traffic will be introduced, and the waterway will be widened and deepened as it has been increasingly plagued by congestion.
From next month, size limits would be imposed on vessels navigating the waterway, formally called the Beijing-Hangzhou Canal, a Ministry of Communications circular said.
The canal was built 1,500 years ago and only 883km of it is still navigable, from Jining in Shandong southwards to Hangzhou in Zhejiang .
Traffic on the waterway peaked in summer 2003, when nearly 6,000 ships were sitting on the river banks near Yangzhou in Jiangsu for more than a fortnight.
The central government launched a scheme in March last year to deal with the congestion.
