Natural gas in China has a substantial potential to grow from its current small share of the total energy use. The growth will contribute to lower air pollution and carbon emissions. Shale gas resources provide an opportunity for expansion and their development reduces dependence on energy imports. We estimate the costs of shale gas supply in China and use the MIT Emissions Predictions and Policy Analysis (EPPA) model to consider the impact of shale gas development on production, consumption, and international trade in natural gas. China’s shale gas production is assessed to be more expensive in comparison to the current shale gas production in the U.S. The large shale resource might be a potential game changer in terms of energy production and consumption in China. However, even with favorable economic conditions, a substantial development of this resource might take a considerable amount of time.