Water scarcity is a crisis which threatens the development of China. Water institution innovation of water rights and water market is necessary for China to overcome water problems. Water rights should be viewed as natural resources property, with water resources (not water product),excluding ecological water demand, as its objects. water rights is thought to be private domain with the features of public domain and quasi-property with the features of typical one. In China, the country owns water resources. In the system of water rights, the property of water resources is the mother of the other water rights including possession right, use right, profitability right and disposition right, which could be departed completely or incompletely from the mother-body and transferred in the water rights market. In China, water is also called water-drawing rights, which could be divided into water-lifting right, water-ditching right, and water-sluicing right according to the methods of water drawing, or into water demand right of agriculture, industry, family and civicism activities according to the means of water utilization. The author don't agree with the opinions that the use right of water body(or water suface), water-draining right and the administration of water sector belong to water rights.