Anaerobic digestion is one of the most sustainable and promising technologies for the management of organic residues. China plays an important role in the world’s biogas industry and has accumulated rich and valuable experience, both positive and negative. The country has established relatively complete laws, policies and a subsidy system; its world-renowned standard system guarantees the implementation of biogas projects. Its prefabricated biogas industry has been developed, and several biogas-linked agricultural models have been disseminated. Nonetheless, the subsidy system in China’s biogas industry is inflexible and cannot lead to marketization, unlike that of its European counterpart. Moreover, the equipment and technology levels of China’s biogas industry are still lagging and underdeveloped. Mono-digestion, rather than co-digestion, dominates the biogas industry. In addition, biogas upgrading technology is immature, and digestate lacks planning and management. China’s government subsidy is reconsidered in this work, resulting in the recommendation that subsidy should be based on products (i.e., output-oriented) instead of only input subsidy for construction. The policy could focus on the revival of abandoned biogas plants as well.