Lindsay Tarpley, Tobin Heath, Abby Wambach and Carli Lloyd scored for the USA, which had never beaten the Steel Roses by as many as four goals in any of their previous 38 meetings.
Tarpley passed her 2007 season total with her team-high fifth goal of the season in the fifth minute on a pass from Lloyd.
Heath, the youngest player on the USA's roster at 19, came on to start the second half and needed only two minutes to score her first international goal set up when she pounced on an errant back pass.
Wambach scored her 87th international goal, striking Rachel Buehler's cross first-time from seven yards out.
Lloyd started where she left off last year when she scored in all four Algarve Cup games, finding the left corner from 13 yards out.
"Four nice goals and I'm happy that we tried to knock it around a little bit and didn't play that direct," U.S. coach Pia Sundhage. "Carli Lloyd and [Shannon] Boxx did a tremendous job in the middle ... we made a lot of changes [in the system and players during the game]. I liked it and they seemed to have fun. Four goals is fun."
The game also marked the first-ever full international appearance for Buehler. It also marked the first appearance for Kate Markgraf since she badly injured her ankle in the semifinal of the 2007 Women's World Cup in China.
Goalkeeper Nicole Barnhart earned the shutout in her fifth career cap and just second game in three years.
More reaction ...
USA-China Summary:
March 5 in Albufeira
USA 4 China 0. Goals: Tarpley 5, Heath 47, Wambach 64, Lloyd 69.
USA -- Barnhart, Buehler, Markgraf (Cox, 46), Rampone, Chalupny, Boxx (Hucles, 70), Lloyd, Tarpley (Heath, 46), O'Reilly (Woznuk, 78), Rodriguez (Kai, 60), Wambach (Cheney, 78).
China -- Zhang Yanru, Le, Kun, Zhang Ying (Shuai, 72), Bi, Zhang Na (Zhang Cheng, 80), Xie (Yue, 70), Liu, Zhang Tong, Xu (Yue, 80), Han.
Referee: Jacqui Melksham (Australia).
Att.: 250.
Algarve Cup Scores:
Group A
March 5
Denmark 1, Germany 0
Sweden 3, Finland 1
Group B
March 5
USA 4, China 0
Norway 4, Italy 2
Group C
March 5
Iceland 2, Poland 0
Portugal 2, Ireland 0
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