Lake Tai is situated in the Yangtze River Delta, a region with some of the strongest potential for development in China. Over the last 30 years, economic reform and modernization have put the region at the forefront of the whole country. Its impressive growth has stimulated the development of eastern China and the Yangtze River basin and contributed to the economic and cultural development of the country. A special feature of the region's economic development has been Town and Village Enterprises (TVEs), especially in the Southern Jiangsu (Sunan) and Northern Zhejiang (Zhebei) regions around Lake Tai. These have greatly increased the income and standard of living of rural residents; compared to rural parts of other regions in China, the area around Lake Tai has become prosperous, and its farmers rich.

Industrial development in villages and towns surrounding Lake Tai made farmers wealthy, but it also polluted the water and caused environmental degradation. In the 30 years after reform and opening up, industrial enterprises in the Lake Tai countryside grew in both size and number, and pollution emissions increased as a result. Due to the widespread coverage in the media, public attention to water pollution in Lake Tai has focused on the annual outbreaks of green-blue algae each summer, but in fact, water pollution in the region in recent years has had two characteristics. First, it is worse downstream from Lake Tai than in the lake itself, but because Lake Tai is the source of drinking water for the surrounding cities, more attention has been paid to controlling pollution in the lake.