Global climate change projections suggest an increasing frequency of droughts and extreme rain events in the steppes of the Eurasian region. Using the eddy covariance method, we measured carbon and water balances of a meadow steppe ecosystem in Northeast China during 2 years which had contrasting precipitation patterns in spring seasons in 2007 and 2008. The meadow steppe sequestrated only 64·2 gC m−2 year−1 in 2007 compared to 160·5 gC m−2 year−1 in 2008, due to a severe spring drought in 2007. The 2007 spring drought resulted in a dramatic reduction of leaf area index (LAI) and aboveground net primary productivity (ANPP). However, the meadow steppe still acted as a carbon sink in 2007. The strength of the sink was much greater than that in the typical steppes in Central Mongolia and Inner Mongolia. Spring drought also caused a reduction of plant transpiration (Tr) and total ecosystem evapotranspiration (ET). However, the suppression of ET in 2007 was relatively small in comparison to gross ecosystem productivity (GEP) reduction. Thus, ecosystem water use efficiency (WEU) (GEP/ET) in 2007 was reduced to 5·0 gCO2 kg−1 H2O or 75% of that of 2008. We concluded that spring drought detrimentally impacted meadow steppe ecosystem by reducing leaf areas, biomass, GEP, WUE and associated increases in soil evaporation (Es) that might aggravate soil salinization of the Songnen Plain. Copyright © 2011 John Wiley & Sons, Ltd.