To analyze water use efficiency and water saving potential in China, based on the water conservancy inputoccupancyoutput tables of China and Haihe River basin in 1999, 2002 and 2007, we proposed a model to calculate water saving potential by sector compared with Haihe River basin, and a model to calculated the water conservation potential by sector. We applied the model in China compared with Haihe River basin and we found that the total water conservation potential of the national economy, compared with Haihe River basin, expanded from 1999 to 2007. Water conservation potential in the primary industry and the secondary industry was relatively large while water conservation potential in the tertiary industry and construction industry was small. In comparison with urban residents, rural residents showed more water conservation potential. Besides the agricultural sector, sectors, such as electricity, steam, hot water production and supply industry(without water electricity), chemical industry, metal smelting and rolling processing industry, paper printing and stationery manufacturing industry, food production and tobacco processing industry, among others, also showed great water conservation potential.