This chapter reviews major changes in the Human Resource Management (HRM) practices in China and then examines key legislative, social, cultural and business factors influencing HRM policies and practices, such as recruitment, training, performance management and reward. It contemplates key challenges facing HRM in China, notably the issues of motivation-performance-reward; skill shortage and its associated problems of recruitment, retention and training. The chapter finally explores the implications of all of these for the HRM function in the near future. State intervention in shaping HRM policies and practices is universal to all countries, although the level and forms of intervention may differ across states and over time. Despite growing evidence of the adoption of more strategic HRM practices, the role of the Human Resource (HR) function in China remains far from being strategic and effective. The role of the HR function/department in the firm has a strong bearing on how strategic the firm views HRM as part of its strategic management.