The capacity of the Chinese wind power sector has increased rapidly over the past half-decade, essentially doubling every year since 2005. The purpose of this paper is to describe the industry's recent development and to discuss some of the policies and policy challenges related to the particular business environment in China. Three issues are highlighted: pricing policies, transmission capacity, and the structure of the equipment manufacturing industry, where substantial overcapacity is emerging as a serious problem. (c) 2010 Elsevier Ltd. All rights reserved.