Energy conservation has been a critical argument in China's development agenda for decades. China had 8 billion tons of greenhouse gas (GHG) emission in 2012 (shared 27% of total global GHG emission), which received attention from researchers at home and abroad. This paper summarizes China's major policy development pathway on energy efficiency since the 1978 open‐door policy. The major focuses of this paper are provided from the perspectives of building energy efficiency capacity and reducing long‐term energy intensity as well as accelerating China's economic transformation. According to the characteristics of economic development phases, energy efficiency policy improvement in the past 35 years could be divided into three categories: planned economic period (1978–1991), partial market economic period (1992–2002) and technology‐oriented economic transformation period (2003‐present). This paper also recommends China's future energy efficiency plan to enable a long‐term energy conservation mechanism, particularly to place a close emphasis on economic transformations. WIREs Energy Environ 2016, 5:715–730. doi: 10.1002/wene.213This article is categorized under: Energy Policy and Planning > Economics and Policy Energy Policy and Planning > Systems and Infrastructure Energy Policy and Planning > Climate and Environment