After introducing groundwater development and other issues, the paper analyzes China's groundwater management system and its problems, and provides suggestions for improving the system. Increasing water demand since the 1970s has resulted in severe groundwater overdraft, water level decline and water quality degradation in China, but the current management system is not able to provide an effective and efficient solution. The legislation is separate and local, the management institutions are locally designed and the key management instruments are not integrated. This is because China lacks distinct groundwater management systems, comprehensive legislation, a quality management system and capacity, as well as coordinated institutions, and clear relationships and effective links among systems. To improve groundwater management, the concept of aquifer management and an integrated groundwater management system must be developed. The existing systems need to be restructured to clarify relationships and functions. The groundwater abstraction permit system needs to be reformed to a group permit. A quality management system is required and capacity building must be strengthened.