Aware of the urgent situation of the water crisis, the Chinese government has initiated an ambitious
water reform to integrate the traditional fragmented water management and promote the
implementation of market-based mechanism, especially water rights trading in water management and
allocation. This paper aims to explore the institutional arrangements of water rights in the specific
context of China’s water policy framework in order to facilitate water rights trading. Based on the
observation of the current practices of water rights trading in China and the review of the latest
development of China’s water rights system, the paper raises some brief recommendations for
improving China’s water rights trading system.