Spatial heterogeneity in economic benefits of water use provides crucial evidence for the evaluation of water diversion projects and the spatial equilibrium of water resource allocation. However, research focusing on the economic benefits of water use in major industries within Chinese cities remains insufficient. We collected water use and value added data of agriculture, industry, and service sectors of 334 Chinese cities in 2017, and used the benefit allocation coefficient method to calculated the economic benefit of water use in the three sectors. Then we analyzed spatial heterogeneity in the economic benefits of water use: for agricultural sector, the high economic benefit of water use regions are primarily concentrated on both sides surrounding of the “Hu Huanyong Line”; regions with high economic benefit of industrial water use are mainly found in the North China Plain, the middle and lower Huanghe River basin, the Yangtze River Delta, the Pearl River Delta, Chongqing and Chengdu; and the economic benefit of service water use is higher in the north than in the south. Based on the fundamental distribution of water resources and the spatial heterogeneity in the economic benefits of water use, potential water diversion areas can be preliminarily identified: the Haihe River Basin in the North China Plain and some areas in the southeast coastal region are potential receiving areas, and the eastern regions of Southwest China with abundant water resources and lower elevations, along with the middle and lower reaches of the Yangtze River are potential source areas. Further research about marginal benefits and water use costs, along with dynamic updates, is required for water resource allocation of China.