China is an early user of geothermal energy, and its direct use ranks first in the world. Recent national strategies and policies have enabled China’s geothermal energy industry to enter a new era with important development opportunities. This paper investigates the strengths, weaknesses, opportunities, and threats (SWOT) to China’s geothermal energy industry from political, economic, social, and technological (PEST) perspectives. SWOT–PEST analysis indicates that the resources, market, and technological foundation exist for the large-scale development of China’s geothermal energy industry. However, it experiences constraints, such as unclear resource distributions, incomplete development of government regulations, incomplete implementation of national policies, unclear authority between governmental administrative systems, and lack of uniform technical standards and codes. Therefore, future development strategies have been proposed to provide technical support and policy tools for geothermal energy development. The recommendations to ensure its healthy and sustainable development include improving resource exploration, rationalizing administration systems, enhancing policy guidance and financial support, and cultivating geothermal talent.