We present a multi‐resolution finite‐element approach for three‐dimensional (3D) electromagnetic (EM) induction modeling in spherical Earth. First, the secondary electric field approach is employed so that both magnetospheric and ionospheric current sources are naturally considered. Second, the multi‐resolution tetrahedral grids are used to approximate the heterogeneous crust and mantle, so that the local ocean effects at coastal and island observatories can be accurately simulated. Furthermore, a parallel goal‐oriented hp‐adaptive finite‐element method with Nédélec vector elements is employed to guarantee the accuracy of solutions for arbitrary 3D conductivity distributions. Finally, two synthetic models are used to verify the accuracy and efficiency of our newly developed forward modeling solver. Results show that accurate solutions can be obtained for problems with several million to hundreds of millions of unknowns in a few minutes using 128 cores on a cluster. We apply this approach to correct the near‐surface ocean effects for several unused Chinese coastal observatories by performing multi‐resolution 3D modeling. The corrected data are inverted for the subsurface layered mantle conductivity structures. The conductivity model beneath southeast China is more resistive than that beneath northeast China by more than half an order of magnitude. By comparing the inverse models with the latest laboratory conductivity‐depth profiles, the estimated transition zone water content is less than 0.01 wt% beneath southeast China irrespective of which laboratory data is used. Considering the low‐velocity anomalies in this region, which suggest high‐temperature structures, less water is expected. We, therefore, infer that the mantle transition zone beneath southeast China is dry.