Mental health in China is a great concern given the large number of patients and huge social and economic costs. The one-month prevalence rate of adult mental disorder in China is about 17.5%. Over 170 million adults have one or more types of mental disorder. Of this, 16 million people are estimated to have serious mental diseases. Over 90% of patients with serious mental diseases in China have not been given proper medical treatment. Over 60% of suicide cases in China are associated with mental disorders and suicide is the most significant reason for death between 19 and 34 years old in China. This paper reviews the mental health care condition in China and discusses policy implications, given current import issues for mental health care. We review research literature for mental health care in China and collect reports from various published sources. Under-supply of the mental health services is the most pivotal issue for policymakers. The utilization of mental health care services in China has increased by double digits in recent years. In 2011, outpatient visits for mental health care were over 27 million. The situation is aggravated by the lack of qualified doctors and the shortage of physical infrastructures such as wards and equipment, leading to many patients with mental disorders being under-treated and under-reported. There are only 1.46 psychiatrists per 100,000 people and 15 beds per 100,000 people. Current government input for mental health in China accounts for less than 1% of total health expenditure. According to the 12th Five-Year Program (2011-2015), the Chinese government will increase its spending on the prevention and treatment of mental health care. The mental health law has been passed by the National People's Congress in October, 2012 and will come into effect on May 1st, 2013. The financial coverage of patients with mental diseases and relevant regulations for involuntary admission are still being debated. Three more issues are discussed. First, the lack of provision of mental health care for vulnerable groups is serious. Second, the opportunistic behavior of both patients and suppliers of mental health care should be addressed. Thirdly, the extraordinary high share of involuntarily admitted patients should be reduced. Mental health care provided in primary care clinics and community is both complement and substitutable for hospital care and should be supported for government to relieve the undersupply condition. First, government should increase financial support for mental health care provision. Second, mental health care provided at community level should be supported and carefully designed by government. Future research should focus on two issues. First, how mental health care services can be provided more efficiently at community level? Second, how can a national mental health care law be helpful to reduce the number of involuntarily admitted patients?