With the increasing scarcity of fossil fuel resources, the demand for greenhouse gas reduction and environmental protection all over the world, developing hydropower becomes one of the most important energy strategies. This paper introduces the current development situation of hydropower in China from following aspects: economy, environment and society as well as assesses their existing problems, and then demonstrates that China must accelerate the development of small hydropower and CDM projects in order to realize the sustainable development of economy, environment and society. (C) 2012 Elsevier Ltd. All rights reserved.