In recent years, financing channel is the key to the success of the public rental housing construction in China. It is the most fundamental issue of sustainable development which restricts public rental housing. Among the financing channels, REITs (real estate investment trusts) can be introduced as a new mode of financing channel. However, at the very beginning this mode's foundation is so weak. Therefore, in the field of China's public rental housing, there is a great number of difficulties in the process of REITs. This paper researched REITs by studying China's external economic environment and internal operational risk. Besides, we analysed the data of Hong Kong in all directions. At last, we pointed out the opportunities and challenges of the development of REITs in China.