China faces a challenge to balance its future urbanization process with resource conservation and environmental protection. Promoting sustainable construction is identified by the Chinese government as an important strategy to tackle such challenges. To promote sustainable construction, the Chinese government has released a large number of laws, policies and regulations. This paper investigates the policy system in China which aims to facilitate the transition to sustainable construction. The related laws, policies and regulations are analyzed and three main functions are identified, namely regulation and control, economic incentives and supporting activities. The results show that the behaviours of various participants in the construction industry, including the government, developers, builders, suppliers, and designers, are regulated and controlled by these laws and regulations. Subsidy policies, award policies and economic innovation policies are adopted by the government to promote renewable energy applications in buildings and infrastructure construction. The key supporting activities for sustainable construction include strengthening technology innovation, improving standards and evaluation, establishing demonstration projects, and publicity. Two emerging challenges of the current policy system are also identified. They are: A lack of considering social and economic dimensions of sustainable construction, and the ineffectiveness of some key policies such as the environmental impact assessment policy. This paper provides a useful reference for construction corporations and policy makers in China to facilitate sustainable construction in future urbanization process. Similarly, policy makers in other emerging economies can understand how sustainable construction is promoted in China.