Forest inventory in China provides valuable information on forestry policy formulation, forest management planning, and international forestry related reports. It includes the national forest inventory (Level I), the forest management planning inventory (Level II), and the forest operation design inventory (Level III) as the primary components. This paper describes the evolution of the inventory system focusing on forest inventories at levels I and II in terms of sampling strategy, plot design, output, and the application of information techniques. The current forest inventory system faces challenges in its transition from a forestry development strategy catered towards timber production in China to one where ecological-oriented management is the primary concern. At the same time, information needs to be expanded from local to national and international scales. Potential improvements are discussed that include sampling design, plot design, potential use of new remote sensing techniques as well as further data analysis.