Biofuels production is expanding rapidly all over the world, driven by rising crude oil prices, the desire of countries to be energy independent, and concerns about climate change. As developed countries, especially the United States, are expanding biofuels production, developing countries are expanding their biofuels industries as well, to power their growing economies. However, developing countries must address the food security issue when they develop biofuels. As China is a developing country with rapid economic growth, population growth, significant demand for fuels, and food security concerns, it serves as a good example for studying the opportunities and challenges faced by developing countries under current conditions. This study analyzes the background, history, and current situation of biofuels development in China. Some implications for developing countries are also provided.