The author argues that the deterioration of the natural environment in China provides a persuasive reason to reorient China’s economic growth towards a more sustainable path. Reconciling the development and environment imperatives needs to become an urgent priority for the Chinese government in order to avert the cascading implications that will arise in terms of social unrest, loss of further development opportunities as well as deepening income inequality. This paper thus examines the inter-relationship between the current ecological challenge in China and the need for economic sustainability. It evaluates the extent of environmental damage in China and focuses on the environmental impact on development and social inequality. The paper then examines the recent legislative measures that have been taken by the Chinese government to address the problem of inefficient environmental monitoring. The author suggests that further reform is needed to achieve an economically and ecologically just pathway for China’s future. The paper therefore demonstrates that the environment–development challenge in China is mainly a challenge of governance. Resolving it will contribute to better environmental justice and development.