Zhang Xiuguo has his fingers crossed. "I just can't take it off my mind," he says, throwing his hands in the air and staring bluntly at the closed doors. Outside those doors is a cluster of 70 ponds, all indoors, in which Xiuguo and his four brothers have invested all they had. The ponds are part of their farm, spread over more than 18 mu (1.2 hectares), complete with 10 wells about 100-m deep and the more than 1 million eels. Then there's the enclosure where eel excreta is degraded organically before it flows into the sea.

Almost every eel in the Zhangs' farm is meant for the Japanese market. And that's true about most of the others in business in Fuqing in Fujian Province, though the fish are first processed in a local roast eel factory. But a majority of eel exports from Fuqing (and in Zhang's case, all) has been halted since July 2007, when the media scooped a fake report saying some baozi (steam buns) sold in Beijing had cardboard fillings.

The Zhang brothers merged their ponds later that month to cope with the crisis. But that didn't help. In fact, the situation has worsened. Xiuguo thought about giving it all up. But how could he? "We've invested too much for too long to give it up. Each of us five brothers has borrowed money from about ten other families - you do the math."

"We're in a dilemma. Our families can prosper or perish because of these eels. So why should we risk the quality of our eels?" Xiuguo's anxiety is shared widely in the county-level city of 1.2 million people. Here, eel farmers, officials and business associations alike are trying desperately, and justifiably, to counter damaging Western media reports and price fluctuations to rescue the industry.

The coastal city of Fuqing has been known as qiaoxiang, or hometown of emigrants, since the Ming Dynasty (1368-1644). But for the last 20 years it's known more as the highest eel-producing city. Yang Zonglong set up the country's first eel farm in Fuqing with Japanese eels in 1987. He ventured into the business after studying in Japan, during which he realized the importance of eels in Japanese cuisine. Many people in Fuqing followed Yang, and today the city produces more than 30 percent of China's eels.

Those achievements, however, came with a price. "Before 2003, we used to use chemicals quite frequently," says 50-year-old Liu Houjun, the largest stakeholder in a 20-mu eel farm at Shutian village in Yuxi town. He and younger brother Liu Houbin studied eel breeding in Japan before returning home to set up shop in 1996.

But after the government imposed strict regulations in 2003, the use of all banned chemicals stopped. Now only chemicals bought from the Fuqing eel association can be used in the farms. Unfortunately, even before groundless rumors on the continuing illegal use of chemicals had died down came the equally baseless charge of poor water quality.

A December 15 New York Times report alleged the water in which Fuqing eels are farmed has become "toxic" because of excessive growth of aqua-farms. The farmers mix illegal chemicals and pesticides in fish feed, which further pollutes the water and threatens consumers' health. When the water is too contaminated, eel farmers simply move elsewhere - to inland cities such as Sanming, to "start the cycle all over again", said the report.

Most of Fuqing's eel farms are in the western townships of Yuxi and Shangjing and rely on wells and a limited number of small reservoirs for water. "Eels are extremely vulnerable to bad water," says Zhuang Zheng, a first-line agriculture inspector. "And water cannot turn 'toxic' just because there are too many eel farms in the area."

The fact that 95 percent of Xiuguo's eels are European sub-species, he says, is enough to prove the quality of water in his farm is top grade. "You need top quality water to breed European eels," he says. Houbin agrees: "You can breed European eels in this water. So how can our water quality be bad?"

Eel farming, Houjun says, is not easy business. "The technology part is crucial. Eel fingerlings have to be kept in a body of water with an even temperature of 28 C, plus or minus 0.5 C. I can't recall how many times my brother and I've taken turns at night to check the water temperature in the ponds. Considering the length of time and amount of effort that I've put in, I think I treat the eels like my children."

The quality of water has never been a concern for the Lius, who have lived with the wells all their lives. They even prefer water drawn from the wells to tap water for tea, just like the Zhangs, whose native Liucu village was once seashore and where slightly salty underground water is still considered ideal for tasty roast eel.

To the north of Yuxi and Shangjing are the Bul hills, which separate most of Fuqing fish farms from the Long River, the city's major waterway, which The New York Times report alleged "has been degraded by waste dumped by paper factories and slaughterhouses". The Dongzhang Reservoir, the largest in Fuqing, which is allegedly "unfit for even contact with the human body", is in the upper reaches of the river, where thousands of people have been living for centuries. The town shares the reservoir's name.

"Water scarcity in Fuqing is as old as history. Even today the city's per capita water resources is less than half of what it is in the country's mid-eastern regions," says Xie Hejie, deputy chief of the city's environment protection bureau. "The reservoir was built in 1958 to regulate water supply. And even today, according to the State Environment Protection Administration (SEPA), the old reservoir only suffers from 'mild eutrophication' compared to 'medium eutrophication' in many of the country's lakes."

Dongzhang Reservoir chief Chen Tianci says the reservoir water has been problem-free since 1999, when most of the accumulated silt was cleared and the murky water drained. "Our water quality is between level 3 and 4," Chen says. "But you ought to know that in 2005, SEPA began a new monitoring scheme to determine the quality of a reservoir's water according to its worst test result. Most of our indicators are level 1, but a few, such as nitrogen and phosphorus proportions, could be level 3 and 4."

"A test on March 5, 2007, when the water level was at its lowest and dead algae were floating, did find the water quality to be below level 4 for nitrogen. But it's absolutely safe to drink after treatment, or to use it for pisciculture and other purposes," he says.

"Environment protection is all about consciousness," says Jiang Huilong, who came out of retirement in Hunan Province two years ago to assume the post of Dongzhang Reservoir chief engineer. "Our wives and kids drink this same water. So we have to care."

Dongzhang residents such as 54-year-old farmer Zhou Yuangui have sacrificed a lot for the reservoir. Zhou was only three years old when a massive resettlement project began in Dongzhang to create space for the reservoir, forcing 75 percent of the population to resettle elsewhere. Zhou's parents moved to Fujian's capital of Fuzhou, but soon they returned to Sanxing village in Dongzhang for want of a stable source of income.

"The authorities had stopped people from any industrial activity in the area so I began raising pigs," Zhou says. "But in 2004, city officials ordered that all pig farms be demolished to better protect the source of water. I had to tear down mine in November 2006, for which the authorities gave me 46,800 yuan ($6,415)."

Zhou's was among the 472 pig farms to be razed in 2006 and 2007, which cost the government 66 million yuan ($9 million). "The pig farmers weren't pleased at first," says Xie. "But now they realize how important water protection is."

The demolition of pig farms forced many villagers out of business. It was a blow to the local economy, but the authorities knew water protection was more important than the temporary setbacks.

Many people moved out in search of better livelihood. Farmer Wang Jinsong was one of them after his farm was razed in December 2006. It takes a 15-minute drive from what was once his farm to reach the nearest construction site: Fuqing's second sewage treatment plant. Workers are linking pipes by the riverside for the plant, which will be ready this year. And by that time, the city's last two recycling paper mills would have been closed down.

"Some say we were at the top of the US' 2007 list for rejected shipments of seafood from China, with 43 rejections in November alone," says Chen Hui, deputy head of Fuqing's inspection and quarantine bureau. "I think they confuse rejection with holding up of consignments."

"We've recorded 81 shipments, or 900 tons of eels, to the US in 2007, and another 5,000 tons to Japan. Not a single consignment was rejected 266 shipments, or over 4,000 tons of shrimps, were sent to the US, too, and only one was rejected. Do you call every consignment 'detained' by US Customs a rejection?"

Last year was by far the worst eel farmers in Fuqing have gone through. "Very few can get financial support from banks because frequent price fluctuations in the Japanese eel market have raised the risks and because fish farmers don't have proper collaterals," says Fuqing eel association chief Liu Minglong. "If it goes on like this, the entire industry will collapse," says his deputy Lin Chunyin.

That would mean a lot more for eel farmers such as Houjun, who can no longer afford a car, or Xiuguo, whose 18-year-old son "could not get higher education and has to remain an eel farmer all his life".

In less than a month, fingerlings should be released in the ponds. But, says Houjun, "Nobody's doing it - because you need money for that, and we don't have any."

No money, no export - and an underdeveloped domestic market means the farmers can't do much to turn things around. As Xiuguo says jokingly: "At the end of the day, why are we still farming eels? To give our best to consumers."