The present system of petroleum industry in China generally has 3 characteristics ―― it focuses on state-owned business, price control and restricted access. Thus China’s petroleum industry has a highly administrative monopoly. A few enterprises have completely monopolized the supply lines from its exploration, mining, refining, wholesale and retail, even to its imports and exports. The research intends to break the administrative monopoly of petroleum industry, stating its objective for the reform and meanwhile figuring out feasibility reforming solution to further liberate the markets of crude oil and product oil.