Australia is one of the world leaders in water management. The country meets the challenge of water shortage with established integrated water management in which rainwater is taken as a too precious resource to be just drained off. In Australia, rainwater is extensively harvested and polished to provide cheaper supply for potable and non-potable domestic uses, irrigation, landscaping, refilling aquifers and other uses. Implementing dual management over the quantity and quality of storm water and practicing water sensitive urban design (WSUD) in urban areas effectively control non-point-source pollution of waterways by pollutants carried with runoffs, reduce the discharge of rainwater and thus protect properties and lives from damage by floods. These achievements are attributed to constant reinforcement by govenments from federal to local levels in policy, financial, legal and educational aspects, and also to the lasting efforts of professional communities and water industry in developing requisite techniques, demonstrating the benefits and fostering public credence of rainwater reuse. The successful rainwater management practices in Australia suggest rainwater harvesting can be a complimentary means for the South-to-North Water Transfer Scheme to solve the water shortage in Chinas northern regions, and thus release to a degree the pressure on the Yangtze water resources. Best management practices of rainwater can be an effective controlling strategy for flooding and non-point-source water pollution of waterways. Such in-site source control initiatives have particular significance to protecting slow waterways of weak self-purification ability, like the Three Gorges Reservior.