China is now a major consumer and importer of energy, and its choices and policies will increasingly affect the rest of the world. This paper analyses the key features of China's energy policy as it faces the prospect of possible challenges to its energy security given the increasing reliance on fuel imports and the need to transform its energy to meet the requirements of a modern, fast-growing economy. The paper examines whether the current energy mix is appropriate and sustainable, and considers the China's policymakers new emphasis on energy efficiency, conservation, renewable energy and the shift to natural gas the primary energy source. It examines the internal and external constraints on China's energy policy and considers the strategic dilemmas arising from China's increasing involvement in international energy markets. It concludes that both the domestic and international implications of China's search for energy security will confront policymakers with hard choices that will affect not only energy policy, but also China's geopolitical grand strategy. (C) 2012 Elsevier Ltd. All rights reserved.