It is suggested in the proposal of the 11th Five Year Plan (from 2006 to 2010) that the total reduction rate of energy intensity per GDP (2005–2010) should be 20%. The annual reduction rate of energy intensity between 2005 and 2010 must reach 4.3% to meet this goal, and the elasticity of energy consumption should be less than 0.5. However, given that in 2000–2005 the average elasticity of energy consumption was as high as 1.084, it will be a great challenge to achieve the goal. We characterize the progress on energy efficiency in the context of the overall Chinese energy system, including both government policies and business efforts. When reviewing recent progress made (until 2007), major energy efficiency improvements can be observed. China is now adopting best efficiency practice in its newly installed capacity. This paper presents the policy packages and efficiency achievements in industry and other sectors.