In recent years, China has experienced rapid economic growth and equally rapid increases in energy use, As a result, energy induced environmental degradation has also increased in China, especially in its urban areas, When this fact is coupled with China's requirement for further economic expansion to meet the growing needs of its population, it is clear that the country faces great challenges in balancing its goal of economic growth with environmental sustainability, This paper suggests that an alternative energy path emphasizing energy efficiency and renewable energy development can be in China's long-term economic and environmental interest.