With the rapid development of China's economy in the recent years, the gap between energy supply and demand has been gradually enlarged. To solve the problem of insufficient reserves of natural gas, greenhouse effect, and safety of coal mines, coalbed methane (CBM) is considered as an effective substitute. First of all, CBM industry status is introduced, mainly including resource endowment, development status, technical conditions, and market environment. Then, the policy environment of CBM in China was summarized into 6 aspects: price policy, tax policy, financial subsidy policy, resource management policy, foreign cooperation policy, and other policies. Thirdly, through Politics, Economics, Society, and Technology analysis, Strength, Weakness, Opportunities, and Threats analysis, Politics, Economics, Society, and Technology-Strength, Weakness, Opportunities, and Threats analysis, and Comparative Analysis, the influence of political factors, economic factors, social factors, and technological factors on CBM industry is analyzed, and the strengths, weaknesses, opportunities, and threats of CBM development are pointed out. Fourth, through the above analysis, development proposal is given from 3 aspects which include policy support, technical support, and market support. Finally, through the analysis of the industry, the related conclusions and the prospect of China's CBM are put forward.