Demand Side Management (DSM) is one of the best and most practical policy tools for China to balance environmental protection and economic growth. U.S. experience, especially the cases of California and Vermont, offers inspiration for further progress in DSM of China. China was first introduced to the concept of DSM in the early 1990s, but the picture is very uneven and there is no clear policy for its broad uptake. In general, the bottleneck for expediting of DSM is the lack of long-term, stable, sufficient and gradually increasing funds to flow into DSM projects. The author redesigns the practical surcharge policy which will provide long-term and stable funding for DSM, the policy to facilitate the financial support from banking sector and capital market, and investigates the possibility of DSM funding from Clean Development Mechanism (CDM) projects.