BEIJING, Aug 4 (AP) -- A ship ran aground in China's 900-year-old Grand Canal dumping 200 tons of sulfuric acid into water, state media said Friday, in the latest incident to taint the country's already severely polluted waterways.

The official Xinhua News Agency said that pollution-control officials dumped 200 tons of liquid alkali into the water within 12 hours to neutralize the acid.

The boat crash occurred Wednesday in the canal's Yuhang section in Hangzhou, about 100 kilometers (60 miles) south of Shanghai, it said.

A test on the canal Thursday showed that water within 500 meters (1,640 feet) of the spill remained polluted, it said, without giving specifics. Water outside that area was "normal," it said.

Boat traffic in the area was banned for half a day after the incident but allowed again after the alkali was dumped in the water, it said.

About 1,000 vessels a day use the Yuhang, it said.

Dirty water is China's most pressing environmental problem. Most of China's canals, rivers and lakes are polluted and only about a third of the 3.7 billion tons (3.3 billion metric tons) of wastewater discharged by China's huge cities each year is treated.