Some key problems that must be solved for power markets are discussed， and a novel competition mechanism of power markets based on the energy-conservation power generation dispatch and the international trade concept is proposed considering the actual situation of Chinese power industry. The proposed mechanism has also been analyzed and discussed in detail. Simulation results show that the proposed mechanism can solve some problems encountered in the power market development in China effectively， which include the combined regional resource optimal configuration and harmonious regional economy development， and the risk in electricity purchase for power grid companies. The proposed mechanism can also coordinate the power markets with the energy-conservation power generation dispatch， environmental emission. The energy-conservation power generation dispatch and environmental emission can be realized by the market mechanism instead of administrative mechanism.