structural:reformatting, quality:correction, information:highlighting
Modern China

Because of various factors—the difficulty of crossing the Yellow River, the increased development of an alternative sea route for grain-ships, and the opening of the Tianjin-Pukou Railway and the Beijing-Hankou Railway —the canal languished and for decades the northern and southern parts remained separate. Many of the canal sections fell into disrepair, and some parts were returned to flat fields. Even today, the Grand Canal has not fully recovered its importance prior to the floods of the mid-19th century. After the founding of the People's Republic of China in 1949, the need for economic development led the authorities to order heavy reconstruction work.

The Grand Canal played a major role during Mao Zedong 's Great Leap Forward as it provided an efficient way to transport grain. It was further refurbished following Deng Xiaoping 's Reform and Opening Up, with improving economic conditions leading to greater infrastructure investment. The economic importance of the canal will likely continue. The provincial governments of Shandong, Jiangsu, and Zhejiang undertook dredging intended to increase shipping capacity by 40 percent by 2012. The central government has also made the main route of the Grand Canal the eastern path of the South-North Water Diversion Project, using enormous pumping stations to redirect water from the Yangtze Delta to the drier north.

The canal became greatly polluted during China's industrialization. By the 1990s, canal barge crews could tell when they neared Hangzhou by the stench of the visibly black water they passed through. Similarly, fishermen on Dongping Lake in Shandong objected to the introduction of water from the Yangtze as part of the South-North Water Diversion Project when they saw it noticeably killing fish and affecting their catch. During the 21st century, increasing efforts have been made to improve environmental conditions along the canal. Around Hangzhou, for instance, a $250 million restoration project begun in 2001 improved water quality to the point where it no longer produces a noticeable odor and is once again capable of supporting some fauna.

On 22 June 2014, UNESCO 's Conference on World Heritage listed the Grand Canal as a World Heritage Site.