Microalgae abundance and diversity in China shows promise for identifying suitable strains for developing algal biorefinery. Numerous strains of microalgae have already been assessed as feedstocks for bioethanol and biodiesel production, but commercial scale algal biofuel production is yet to be demonstrated, most likely due to huge energy costs associated with algae cultivation, harvesting and processing. Biorefining, integrated processes for the conversion of biomass into a variety of products, can improve the prospects of microalgal biofuels by combining them with the production of high value co-products. Numerous microalgal strains in China have been identified as producers of various high value by-products with wide application in the medicine, food, and cosmetics industries. This paper reviews microalgae resources in China and their potential in producing liquid biofuels (bioethanol and biodiesel) and high value products in an integrated biorefinery approach. Implementation of a 'high value product first' principle should make the integrated process of fuels and chemicals production economically feasible and will ensure that public and private interest in the development of microalgal biotechnology is maintained.