Sustainable forest management is described, in theory and in practice, especially in the regions where the forest resources have been damaged seriously for economic development. It emphasizes the need to exert the multi-functions of forest ecosystems. The paper analyses the main benefits and constraints of sustainable forest management with regard to the special natural and economic conditions of China. According to the basic principles of sustainable forest management, China has been taking the relevant actions. Six national programmes and participatory forest management for forest resources utilisation and conservation are operative as regional implementation strategies. Demonstrations, with 13 sample sites in different typical regions, and 8 Criteria and 80 Indicators based on the Montreal Process for monitoring and assessment of sustainable forest management at the national level, have been established and tested. Biological diversity conservation, plantation management for timber production natural forest protection, non-wood products and technical training will become the priorities for sustainable forest management in China.