Examining the intricate interplay between ecosystem carbon-water coupling and soil moisture sensitivity serves as a crucial approach to effectively assess the dilemma arising from escalating global carbon emissions and concomitant water scarcity. Using the Lund–Potsdam–Jena Dynamic Global Vegetation Model (LPJ), this study investigated the potential effects of climate change and soil water content (SWC) on terrestrial ecosystem water use efficiency (WUE) across China from 1982 to 2060. The results revealed that: (1) WUE was higher in South China and Northeast China, but lower in Northwest China and it had shown a significant upward trend in the past 40 years, especially in Northwest China where grasslands were widely distributed. The increase in WUE was mainly closely related to the greening of vegetation. In the past 40 years, the area of net primary productivity (NPP), evapotranspiration (ET), and WUE showing an upward trend accounted for 85.85 %, 63.66 %, and 83.88 % of the total area of the country, respectively. Although ET also showed an increasing trend nationwide, the increase of NPP was more obvious; (2) The control experiment showed that WUE showed a significant increase trend in arid and semi-arid areas of Northwest China with the increase of CO2 concentration, while SWC showed a significant drying trend, but both WUE and SWC showed an increasing trend in humid areas. The sensitivity of WUE to SWC was enhanced in arid and semi-arid areas, and the effect of soil drought was partially offset by the increase of WUE; (3) Future climate projections also indicated that the CO2 fertilization effect will contribute to an increase in WUE while causing drier soil moisture conditions in the arid and semi-arid regions. Especially under the SSP5-8.5 scenario, CO2 fertilization in Northwest China contributed more than 14 % to WUE from 2015 to 2060, while the impact on SWC depletion exceeded 3 %. This highlights the potential implications of rising atmospheric CO2 concentration, as it may promote a significant rise in WUE and exacerbate the drying of soil moisture in these areas. These findings emphasize the need for careful attention and consideration in managing water resources in arid and semi-arid regions in the face of future climate change.