Abstract China, like many other countries, is promoting the development of liquid biofuel, including bioethanol and biodiesel. The Chinese government has set biofuel development targets for the coming decade and sanctioned a series of supportive policies. This paper provides a comprehensive overview of current liquid biofuel development in China, related government policies, and the potential opportunities and challenges for its future expansion. Our assessment is based on two rounds of in-depth fieldwork and a thorough literature review. The assessment shows that the prevailing concern on food security has pushed China to move from cereal-based to non-cereal-based biofuel production. Emphasis has also been put on utilizing new marginal land for feedstock production. Our assessment indicates that the targets of China's biofuel development are cautious and feasible, but on the other hand there are still severe challenges for the sustainability of such development. A better understanding of China's experience in striking a balance between energy security, food security and environmental protection would inform the debates across country boundaries and contribute to the efforts for global sustainability.