China has become the world's largest CO2 emitter since 2006, and will continue to keep a rapid economic expansion with increasing energy consumption and emissions. China is facing the increasingly worse environment and rising pressure of emission reduction from home and abroad. Recent years have seen the gradual emergence of several problems that pose fundamental challenges for China's long-term energy conservation and emission reduction strategies. This study discusses these problems and challenges, as well as the latest state policies and plans to address them. Loop holes of the latest policies are found and further reforms and recommendations are suggested to better deal with the challenges. The lessons learnt from China will provide valuable reference and useful inputs for other emerging economies.