The situations of over torque and inactivity often occur to pipe jacking machine with conventional motor drive in composite ground. In this case, the variable pumpvariable motor closed hydraulic system for cutterhead center driving is designed. According to the requirements of the composite ground, the running parameters of variable pumpvariable motor are matched on the basis of theoretical calculation. The hydraulic system model is established by software AMESim; and the three modes of cutterhead under conditions of low speed, high speed and jam releasing are simulated and analyzed. The results of theoretical calculation and simulation show that the closed hydraulic system has a good applicability to composite ground.