The increasing dependence on imported oil and tremendous greenhouse gases (GHG) emission is making the diversification of primary fuel such as petroleum a critical vital energy and environmental issue in China. China is promoting bioethanol by mandatory use in nine provinces and the expansion is on agenda. This paper first reviews China's bioethanol development. Next, suitable feedstock crops for expanded ethanol production are discussed. Particularly, bioethanol expansion by national application of E10 is investigated from perspectives of potential in bioethanol supply, projected ethanol demand, and the possible cost-effective bioethanol distribution system. It is calculated that by making use of un-used land for feedstock planting and introduction of improved feedstock varieties, potential bioethanol production capacity in China will be up to 25.33 million tons per year. Ethanol demand for national application of E10 is projected to be around 7 million tons per year. A linear optimization model is used to consider the economic costs of distributing bioethanol in China. The optimization result suggests that development of bioethanol industry may focus on Henan, Jilin, Anhui, Jiangxi and Sichuan basin. It also estimates 53.79 RMB per ton of bioethanol for downstream rail or truck transportation remain a relatively small fraction of total fuel cost. Thanks to the well developed railway network in China, more bioethanol can be distributed at a relatively modest premium distribution costs and with low environmental influences. (C) 2011 Elsevier Ltd. All rights reserved.