You can flush it in most higher residences as long as the toilet paper is soluable. I think the reason binning developed was that the Chinese didn't produce soluable toilet paper in the past, and now the habit carried on (my grandma told my mom, my mom told me) even though the tech has caught up. I'm not really sure about squat toilets, though.

Never drink the water though. Even boiling isn't that safe anymore, just use bottled.